Buying and Selling Offshore Properties — Protecting against Title, Lien, and Successor Liability Pitfalls
As exploration and development of the Outer Continental Shelf (OCS) has matured, so has the legal framework supporting such activities. Yet, just as there remain untapped pools of hydrocarbons under the seabed floor, there exist undecided and unaddressed questions tions in the governing laws and regulations. To do business effectively on the OCS, it is important to understand what the law provides and to identify the apparent gaps. For only then can we negotiate our deals and draft our paper to protect against title, lien and successor liability pitfalls.
This paper does not purport to identify all unanswered questions confronting the sellers and buyers of OCS blocks - much too daunting of a task! Rather, its focus is narrowed to considering (i) the framework established by the Outer Continental Shelf Lands Act (OCSLA),1 and its implementing regulations administered by the Minerals Management Service of the United States Department of the Interior (MMS),2 (ii) the implications of this statutory and regulatory framework for transfers of title to OCS interests from seller to buyer and for the rights of creditors under financing vehicles commonly used to accomplish such trades and (iii) the possible means of addressing the allocation between seller and buyer of responsibility for residual lease liabilities.
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