Word: harken
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...suburban Dallas company is surely one of the most mysterious and eccentric outfits ever to drill for oil. Harken consists of almost no assets besides an exclusive 35-year contract to explore for crude in Bahrain. When the country's rulers handed Harken that deal early last year, it puzzled oil experts around the world. Why would Bahrain stake so much of its financial future on an obscure, money-losing company with no refineries and no experience in offshore oil exploration? "It was a surprise," says Jay Gallagher, a senior analyst for Petroconsultants, one of the world's largest...
...deal ignited oil-patch speculation that Bahrain's rulers see the arrangement as a way to gain influence with the Bush Administration. The President's son, known informally as George Jr., is a Harken investor, director and consultant. No one has produced evidence that Bahrain has won any favors from the White House in return. Yet the financial connection has caused the Administration some discomfort, most notably last fall when reporters asked whether the young Bush's gulf investment had any influence on his father's decision to send troops there. Said Bush's son last October...
...firm Bahrain chose to find its bonanza has a freewheeling history, even by Texas standards. Harken director E. Stuart Watson, a former executive for oil giant Atlantic Richfield, calls the Dallas company's deals "convoluted" and difficult even for industry veterans to grasp. Says Harken founder Phil Kendrick, still a small shareholder: "Their annual reports and press releases get me totally befuddled. There's been so much promotion, manipulation and inside dealmaking. It's been a fast-numbers game." Some former executives charge the firm with routinely inflating its assets to make its balance sheets look better. Harken's longtime...
...Harken began life in the late 1970s as an unprofitable collection of Texas oil wells for investors seeking tax write-offs. That strategy changed in 1984 when Alan Quasha, a lawyer and Harvard M.B.A., bought control and became chairman. Quasha proceeded to trade large chunks of Harken stock for sick oil companies, which owned not only wells but also pipelines and retail gas stations. Aiming to salvage or spin off the assets, Quasha generated a dizzying web of deals that would eventually push Harken's debt past $100 million and boost its revenues to more than $1.1 billion...
...Along the way Harken began to suffer from the collapse of oil prices, which depressed the value of assets it had acquired. Yet Quasha managed to attract a steady flow of investment capital from the likes of Harvard's endowment fund, Hungarian-born superinvestor George Soros and the South African liquor and tobacco barons, the Rupert family. Despite the company's sloppy bookkeeping and long-shot prospects, all except Soros continue to hold large blocks of stock. "Alan Quasha will charm your pants off," explains a former Harken executive. "You will take your wallet out and empty it into anything...