HKN, Inc. is a company engaged in

hydrocarbon exploration Hydrocarbon exploration (or oil and gas exploration) is the search by petroleum geologists and geophysicists for deposits of hydrocarbons, particularly petroleum and natural gas, in the Earth using petroleum geology. Exploration methods Vis ...

headquartered in

Southlake, Texas Southlake is a city located predominantly in Tarrant County with minor areas extending into Denton County in the U.S. state of Texas. Southlake is a suburb of Dallas/Fort Worth. As of th2019 census estimateit had a population of 32,376. Histo ...

. It is notable for the Harken Energy scandal, which involved allegations of insider trading by

George W. Bush George Walker Bush (born July 6, 1946) is an American politician who served as the 43rd president of the United States from 2001 to 2009. A member of the Republican Party, Bush family, and son of the 41st president George H. W. Bush, he ...

in 1990. The company was known as Harken Energy Corporation until 2007.

History

In 1973, the company was founded as an unprofitable collection of Texas oil wells for investors seeking tax

write-off A write-off is a reduction of the recognized value of something. In accounting, this is a recognition of the reduced or zero value of an asset. In income tax statements, this is a reduction of taxable income, as a recognition of certain expenses ...

s. In 1986, the company acquired

Spectrum 7 Spectrum 7 was an oil company started by William DeWitt and Mercer Reynolds. In 1984, Spectrum 7 merged with George W. Bush's Arbusto Energy. After the merger, Bush became the Chairman and CEO of Spectrum 7. According to George Soros ...

for 200,000 shares from George W. Bush. After the sale of his company, Bush served on the board of directors of the company and received $80,000-$100,000 per year in consulting fees. Bush remained on the board through 1993. In 1987, Talat Othman joined the board of the company and served as the chair of the Audit Committee. In 1987, Bush obtained a critical $25 million load from a BCCI joint venture. In 1989, the company's subsidiary Aloha Petroleum was sold to company insiders for $12 million, most of which was borrowed from Harken. The sale of the subsidiary for an exorbitant price helped the company show a profit that year and disguise losses, a similar technique used by

Enron Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded by Kenneth Lay in 1985 as a merger between Lay's Houston Natural Gas and InterNorth, both relatively small regional compani ...

that led to the Enron scandal. In September 1989, the company made an offer to acquire Tesoro Petroleum. The offer was withdrawn in February 1990. In 2007, the company changed its name to HKN, Inc.

Controversies

Insider trading allegations

Harken attracted attention because of the role played in its affairs during the 1980s by George W. Bush, later the

President of the United States The president of the United States (POTUS) is the head of state and head of government of the United States of America. The president directs the executive branch of the federal government and is the commander-in-chief of the United States ...

. On June 22, 1990, while he was a member of the company's board of directors, Bush sold stock in Harken shortly before the company announced substantial losses. This transaction resulted in a

U.S. Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...

investigation of probable insider trading. A transaction associated with the financial endowment of

Harvard University Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of high ...

was also investigated.

Exploration offshore Costa Rica

In 2000, a subsidiary of the company received a 20-year concession to exploit resources offshore Costa Rica. After pressure from indigenous tribes and environmentalists, operating as Acción de Lucha Anti-Petrola, the government instituted a moratorium on exploration. In September 2003, the company filed a dispute seeking $57 billion from the government of Costa Rica for lost earnings. The lawsuit was thrown out of court and the concession was revoked.

References

{{DEFAULTSORT:Hkn, Inc. Oil companies of the United States Petroleum in Texas Companies based in the Dallas–Fort Worth metroplex Tarrant County, Texas Non-renewable resource companies established in 1973 Energy companies established in 1973 1973 establishments in Texas