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Deal Formation Issues in Oil and Gas Asset Acquisitions

Kurt M. Petersen, Joseph P. McMahon, Oil and Gas Acquisitions (1995)

This paper examines “Deal Formation Issues” related to oil and gas asset acquisitions, or, in more legalistic terms, the issues that arise before the execution of a completely integrated Purchase and Sale Agreement for producing and non-producing oil and gas assets. Although the goal of the Buyer is to purchase and the goal of the Seller is to sell, many issues arise as the parties proceed from concepts, through due diligence, to execution of a completely integrated agreement. The first section of this paper examines the issues surrounding contract formation, which is the ultimate goal of both Buyer and Seller. The second section examines the essential deal terms and how such terms are evaluated by each side. The third section examines issues that arise when negotiating and conducting due diligence. The fourth section examines a very unpredictable area of the law — liabilities and obligations (intended and unintended) that may arise before execution of the final agreement. The fifth section discusses letters of intent and the last section examines several miscellaneous issues.