Getting Complex Deals Done: Structuring, Documenting, and Closing an Oil and Gas Asset Sale

• Semester: Fall 2022
• Course ID: 296W
• Credit Hours: 2
• Unique: 29404

Description

This course is intended for students in their second or third years at the School of Law.  Although not a requirement to register for the course, it would be ideal for students taking the course to have completed the basic Oil and Gas Law course.  Students taking the course will also likely find it helpful to have completed the Business Associations and Federal Income Taxation courses.

This course would offer students detailed practical exposure to the manner in which complex acquisition and disposition (“A&D”) transactions are structured, documented, and consummated. Since the instructor’s practice has focused, for 43 years, on energy-related transactions, the template transaction for the course will be the sale of a substantial package of upstream oil and gas assets.  During the 14 class sessions, we will cover:

(a)     negotiating philosophy and basic contract drafting principles, including the strategic use of defined terms;

(b)     who are the sellers, and why do they sell; who are the buyers, and why do they buy;

(c)      selecting the transaction structure: asset sale v. business combination v. sale of equity, including high level discussions of divisive mergers and federal income tax, securities law, and other considerations;

(d)     overview of financing alternatives for an upstream oil and gas acquisition;

(e)     engaging an investment banker and implementing a data room, including the structure and terms of the confidentiality agreements between the seller and prospective buyers;

(f)      letters of intent and term sheets; and

(g)     the structure and terms of an asset purchase and sale agreement, including:

• the identification and description of the assets to be sold;
• the valuation of the assets and the determination of the purchase price, including the use of an earnest money deposit, adjustments to the purchase price, the structuring and use of earnouts, and allocations of the purchase price for federal income tax and due diligence purposes;
• the assumption of liabilities by the buyer; the retention of liabilities by seller;
• commonly encountered representations and warranties and their purposes;
• the development and performance of a plan of due diligence, with focus on title- and environmental-related due diligence, including title- and environmental-related purchase price adjustments;
• pre-closing covenants of the parties, including the applicability of the Hart-Scott-Rodino Antitrust Improvements Act and covenants detailing the seller’s obligations regarding preferential rights to purchase, required consents to assignment, and other restrictions on transferability;
• conditions precedent to closing; remedies for breach and other failures to satisfy conditions; and waiver of conditions and consequences of waivers;
• mechanics and logistics of closing, including the use (or non-use) of opinions of counsel;
• selected conveyancing issues;
• post-closing covenants, including the preparation of the final settlement statement, change of operator issues, surviving confidentiality obligations, and obligations of the seller to provide transitional operations and accounting services;
• post-closing indemnification, including limited survival of representations and warranties, scope of indemnities, the “express negligence rule”, and indemnity “thresholds”, “baskets”, and “caps”; and
• the “miscellaneous provisions”, with focus on the assignability of the PSA, the selection of governing law, responsibility for taxes, the role of alternative dispute resolution, and limitations on the types of damages recoverable for breach.