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Acquisition Structures—Part Ii Stock vs. Asset Transactions and Back-To-Back Transactions

James M. Piccone, Oil and Gas Acquisitions (1995)

This paper discusses two unrelated topics that can arise in major transactions. In a chronological sense, these are among the first and last issues to be addressed. The first, whether the form of transaction will be by way of asset transfer or stock transaction, has to be settled before one can coherently draft the purchase and sale agreement. The second, looking forward to a follow-on sale, looks toward a relationship that follows, and is dependent upon the primary transaction.

There have been numerous papers written on the subject of choosing whether a transaction should be in the form of an asset or stock sale.1 The topic is included in this Special Institute's proceedings because of its fundamental nature. What can be offered here is possibly a little variation in perspective on the basic points and a focus on several factors that are unique to oil and gas transactions. Because another paper at this institute will cover the tax aspects of the structure question, however, this paper addresses only the non-tax issues.

The second topic, planning for back-to-back transactions, is growing in significance in oil and gas deals and appears to be unique as a topic for a legal discussion.2 In today's world of premium-priced transactions, the buyer often incorporates into its acquisition strategy a plan to dispose of some of the acquired properties.3 What is covered