And in this evolving landscape, it’s these transactions that present new opportunities for those keen to maximise recovery from the basin.
Recently we’ve seen some high-profile deals done.
Aberdeen-headquartered Ithaca Energy snapped up Chevron’s central North Sea business; ConocoPhillips recently agreed to offload its UK division to private-equity backed Chrysaor; and Marathon Oil has just divested its North Sea business to RockRose Energy.
But cross-jurisdiction transactions bring their own challenges and, while a contract can look pretty straightforward at first glance, the underlying law can vary considerably. And that’s where local expertise proves invaluable.
To that end, we’ve found membership of Lawyers Associated Worldwide (LAW) beneficial. This organisation brings together 100 independent firms in more than 50 countries.
Real world capability
To illustrate, we worked with our Oslo-based LAW partner firm Rime Advokatfirma as legal advisors to the sellers of a Scottish company — the target — to a Norwegian purchaser.
The target is a service company in the oil and gas sector, with assets mainly located here in the UK and a head office in Scotland.
Unusually, given both the target and the sellers were based in Scotland, the purchaser insisted the deal be governed by Norwegian law, and its Norwegian legal advisors took the lead drafting the contract setting out transaction terms.
However, the transaction couldn’t be run solely as a Norwegian one, with only Norwegian advisors acting for the parties: the buyer needed to engage Scots lawyers to support and advise on matters such as the validity of title to shares, an investigation into the target’s premises and a review of contracts that were, for the most part, governed by Scots or English law.
On the seller side, while the intention of contract terms are generally understandable regardless of which law applies, they still need to be considered alongside the underlying law of the country with jurisdiction over the contract in order to ensure they don’t run counter to local law.
In short, both the buyer and the seller had to appoint lawyers in the other’s home jurisdiction.
Collaborating using our network
This meant we had to engage and collaborate with Norwegian lawyers, experienced in corporate transactions, at short notice on the seller’s behalf. And we did that using the LAW network.
Working alongside Rime Advokatfirma we compared and contrasted the relevant law in the UK and Norway and the customs adopted by advisors and courts in the different jurisdictions. Fundamentally, this meant it was relatively straightforward to come up with workable compromises that made it a far easier process to finalise the deal than it otherwise would have been.
Given the increasingly international outlook of companies engaged in the UK supply chain in the oil and gas sector — and of course in the renewables and decommissioning industries too — it’s worth engaging with lawyers at as early a stage as possible, especially where there are overseas elements to a transaction. And it’s extremely helpful if those you appoint can quickly secure trusted, specialist local advice.
This article appeared in Oil and Gas Vision in July 2019.
