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Business Overview of a Sale Transaction

W. Paul Loyd, Jane Fleck Romanov, Oil and Gas Agreements: Sales and Financings (2006)

1.1 Scope of Paper. The purpose of this paper is to discuss the decision-making process in the sale of oil and gas properties; identify tasks and issues associated with the implementation of the decision; address legal issues that may arise in preparing for a sale of assets;1 and provide a corporate insider view of the divestiture process with practical suggestions on what has worked and what has not.

ARTICLE 2 DECIDING TO SELL

2.1 The Process. Making a decision to sell oil and gas properties and their related assets is a function of a company's structure and its personality. Some companies' ability to decide to sell, and determine what assets to sell, may be constrained by seemingly impenetrable barriers of rules, policies, stone-engraved strategy and corporate temperament. Other companies foster a process that is robust and streamlined, purposely implementing methodologies and forming “knowledge-deep” acquisition and divestiture teams who may be deployed quickly and effectively when sale opportunities surface.

Traditionally, companies have been managed through a strategic planning process conducted annually. The plans include annual budgets and goals for the various business units, including acquisitions and divestitures, based on theoretical forecasts of how the company can grow, improve earnings and reduce costs. However, no matter how qualified t