The Deal Corner

The in-house attorney and in-house landman’s home for commentary, insight, and analysis of upstream oil and gas A&D issues, transactional issues, and recent deals.

26Aug

Schlumberger to Buy Cameron – What does this Mean for A&D?

Posted by: Austin Brister in The Deal Corner

The world’s largest oilfield service company, Schlumberger Ltd., and one of the largest providers of oilfield equipment, Cameron International Corp., announced today in a joint press release that the parties have executed an Agreement and Plan of Merger under which Schlumberger will buy Cameron in an all-stock deal valued at $14.8 billion.

The parties held a teleconference this morning, as announced in their 8K filing. Under the Merger Agreement, Schlumberger Holdings will acquire Cameron in a transaction in which Rain Merger Sub LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Schlumberger Holdings, will merge with and into Cameron, with Cameron as the surviving entity, and with Schlumberger Holdings acquiring all of the stock of Cameron. Read More »

11May

Noble Energy to Acquire Rosetta Resources

Posted by: Austin Brister in The Deal Corner

Early this morning (Monday, May 11, 2015), Noble Energy announced that has entered into a definitive merger agreement under which it will acquire Rosetta Resources.

Since the onset of the oil collapse in October 2014, experts have been forecasting a massive wave of A&D activity in the oil and gas space. These forecasts have been steady since late 2014, but there has been very little consolidation activity thus far.

The Noble-Rosetta deal may mark the beginning of a huge wave of A&D activity in oil and gas.

Under the definitive merger agreement, which was unanimously agreed to by the directors for both companies, Noble will be acquiring Rosetta in an all-stock transaction, at a 38% premium over Rosett’a Friday close of $19.33.

The deal aims to bring Noble into two gigantic, oil-rich, and highly economic, shale plays: the Eagle Ford and Permian Basin. Rosetta currently has an assets base including approximately 50,000 net acres in the Eagle Ford and 56,000 net acres in the Permian.

This marks the first time since the oil downturn that a major U.S. oil and gas company has acquired another oil and gas company.

If you have been to one of my recent presentations on “A&D During the Oil Downturn,” then you have heard me outline several reasons experts believe this A&D activity has been delayed, and what companies are doing to prepare for these acquisitions. Many sellers are likely to be strapped for cash, which introduces numerous potential issues for a due diligence team to tackle.

Share your thoughts below.

29May

Farmout Agreements: Key Decisions and Negotiation Points

Posted by: Austin Brister in Primers and Insights, The Deal Corner

Introduction

As I stated in my Part One of my Farmout Agreement Series, farmout agreements can be somewhat less “straight-forward” than other common oil and gas agreements. Contracts, Leases, JOA’s, for example, are each highly standardized and have one or more publishers of highly-adopted forms. Farmout Agreements, on the other hand, range from mere one-page letter agreements to highly formalized and lengthy contracts, prepared and negotiated over several rounds of back and forth red-lining. An attorney cannot simply turn to his form books (or form folder for the tech savvy), and is unlikely to find any comprehensive checklists for drafting the agreement.

While there is no standardized form, a standard set of terminology has certainly developed that will guide most decisions, negotiations, and drafting exercises. Below, we’ll consider several of the most crucial provisions of a farmout agreement, including:

The Duty Imposed;
The Earning Barrier;
The Interest to be Earned;
Number of Wells to be Committed to the Agreement; and
Timing of Issuance of Farmout Acreage.

20Jan

Where the Use of Forms Goes Wrong

Posted by: Austin Brister in Primers and Insights, The Deal Corner

The Proliferation of Forms:

The wide-spread use of forms in the oil and gas industry has created nothing short of a revolution in allowing land professionals to expedite the process of putting complex agreements in place. Additionally, this “forms culture” has dramatically helped to ensure excellent quality legal drafting and coverage of legal concepts in a continuously developing and complex legal regime — oil and gas law.

One example of such a widely used form is the Model Form Joint Operating Agreement published by the AAPL. Additionally, several publishers have created their own version of the ubiquitous “Producer’s 88” oil and gas lease form (which, on an unrelated note, has caused great confusion due to the same name being used for a wide variety of lease forms). The Association of International Petroleum Negotiators have also developed several forms for use in the oilpatch. As one last example, Kanes Forms has published a wide variety of forms, such as affidavits, mineral and surface deeds, assignments, and various agreements for use in the oil and gas industry.

But is this widespread reliance on forms purely positive? If not, then what are some of the major landmines to be aware of?

Where Are Forms Inadequate?

One of the first lessons I learned back when I was drafting and negotiating agreements in the construction industry was this: forms are a great starting place, but they shouldn’t be used blindly. The exact same principal applies in Oil and Gas. Some of the reasons for this include: Read More »

1Jan

Dirty Tricks & Cheap Moves in the Oilpatch

Posted by: Austin Brister in The Deal Corner

High risk, high reward. We in the oil and gas industry have been toughened; have been forced to learn to traverse the risk, and to reap the rewards. Heck, oil and gas exploration and production is practically as synonymous with the “American Dream” as we can get. The plentiful rewards that lie at the end of a successful oil and gas venture lead many into an epic journey fueled by palpable ambition and great effort. We’ve all heard amazing tales tracing the paths of the oil and gas trailblazers, the ones who got lucky, and those who were willing to sacrifice to get there (if not, see “The Prize“). But every possible path to high reward is guarded by a common vault-door: acceptance of high risk.

Unfortunately, as these stories show us, this risk to reward balance can and has lead many to lying, cheating, dishonesty, half-truths and otherwise misleading conversations, deals and agreements (again, see “The Prize”). However, this is all directly in conflict with the prevailing “unspoken rule” in the oil and gas business: honesty and fair dealing. Call it what you will, “old boys club,” “gentlemen’s business,” “good ol’ boys,” etc. The oil and gas industry is undeniably all about the relationships you have built, and the trust and rapport you have developed.

Nevertheless, in helping my clients negotiate and close all sorts of deals and resolve various disputes, I have inevitably ran across several “dirty tricks” and “cheap moves.” The following is an explanation of some of these dirty or cheap oil and gas negotiation tactics, how to avoid them, and suggestions for responding when the tactics are spotted.
Read More »

26Dec

Farmout Agreements: The Basics, Negotiations and Motivations

Posted by: Austin Brister in Primers and Insights, The Deal Corner

Farmout Agreements are one of the most widely used agreements in the oil and gas industry.^[1]Special thanks to Professor Lowe for his excellent article on this subject, Analyzing Oil and Gas Farmout Agreements, Sw. L.J. 759 (1987). However, there is no largely adopted model form. As such, they vary a great deal. Kanes Forms has provided several Farmout Agreement Forms, but these have not been adopted as an industry standard, and so every farmout agreement approached must be fully analyzed and every term must be understood. This multi-part article will summarize the common ground, and provide a framework for analyzing the various options for certain provisions. Read More »

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