A&D Land Support: Sproule ERCE Asset Management assists an E&P startup with its first acquisition
A small start-up exploration and production (E&P) company had secured financing and was seeking its first asset acquisition. The company evaluated numerous opportunities and submitted an offer on an asset package marketed through a receivership process. The bid was successful, and now the start-up faced the daunting task of conducting due diligence and preparing all the closing documentation on a tight deadline.
Sproule ERCE Asset Management provided expert land management oil and gas support to perform the confirmatory due diligence, draft and prepare all the required purchase and conveyance agreements, and closed the acquisition within the required timeframe. The start-up remains a client to this day, with Sproule ERCE managing the day-to-day Land functions.
Sproule ERCE Asset Management provided expert land management oil and gas support to perform the confirmatory due diligence, draft and prepare all the required purchase and conveyance agreements, and closed the acquisition within the required timeframe. The start-up remains a client to this day, with Sproule ERCE managing the day-to-day Land functions.
Project Highlights
- Start-up E&P with no internal Land personnel
- Offer to purchase made and accepted on oil & gas assets within a receivership disposition package
- Effective and fit for purpose Land due diligence required prior to closing
- All conveyance agreements and closing documents to be drafted and prepared within a tight timeframe
- Closing and post-closing work to be completed
Challenges:
Startup Resource Constraints: This start-up was a small four-person technical team, with no Land personnel to conduct Land due diligence, title review, or to draft and prepare the Purchase & Sale Agreement, asset schedules and the required conveyance documents for closing.
Purchaser‑Prepared Transaction Documents: The Vendor in this deal was the court appointed Receiver for oil and gas assets in receivership and consequently required the Purchaser to draft all the agreements and documents that are normally prepared by the Vendor in typical oil and gas A&D transactions.
Non‑Extendable Closing Deadline: The court‑appointed Receiver required the transaction to be closed within a few weeks of the acceptance of the offer. The deadline to close the deal was tight, with no option to extend the closing date.
Purchaser‑Prepared Transaction Documents: The Vendor in this deal was the court appointed Receiver for oil and gas assets in receivership and consequently required the Purchaser to draft all the agreements and documents that are normally prepared by the Vendor in typical oil and gas A&D transactions.
Non‑Extendable Closing Deadline: The court‑appointed Receiver required the transaction to be closed within a few weeks of the acceptance of the offer. The deadline to close the deal was tight, with no option to extend the closing date.
Solutions:
Due Diligence Review: Sproule ERCE Asset Management provided an expert Land team to review all Vendor files, confirm contractual obligations, verify chain of title, working interests, and confirm all rental, royalty and partner payments were correct and current. The due diligence review was completed efficiently, and a comprehensive report was supplied to the client, allowing them to confidently finalize the transaction resolving the potential risk of unrecognized liabilities or title deficiencies.
Conveyance Document Preparation: The Sproule ERCE Asset Management Land team coordinated the drafting and negotiation of the definitive Purchase & Sale Agreement, as well as all the specific conveyance documents relating to the transaction, including: Interim Statement of Adjustments (ISOA), Right of First Refusal (ROFR) notices, consents, contract and freehold lease assignments, Crown surface and mineral lease transfers, and well/facility/pipeline licence transfers to facilitate the closing.
Closing the Transaction: The Sproule ERCE Asset Management Land team efficiently coordinated the closing of the transaction, ensuring all documents were executed, funds were transferred, and all closing adjustments captured.
Post-close Management: The Sproule ERCE Asset Management Land team was essential in supporting the post-close transition of the assets to the client. All Land records were set up and updated, notifications were sent to partners/landowners, final accounting adjustments were completed, and Sproule ERCE continues to manage the ongoing Land department functions for the client.
Conveyance Document Preparation: The Sproule ERCE Asset Management Land team coordinated the drafting and negotiation of the definitive Purchase & Sale Agreement, as well as all the specific conveyance documents relating to the transaction, including: Interim Statement of Adjustments (ISOA), Right of First Refusal (ROFR) notices, consents, contract and freehold lease assignments, Crown surface and mineral lease transfers, and well/facility/pipeline licence transfers to facilitate the closing.
Closing the Transaction: The Sproule ERCE Asset Management Land team efficiently coordinated the closing of the transaction, ensuring all documents were executed, funds were transferred, and all closing adjustments captured.
Post-close Management: The Sproule ERCE Asset Management Land team was essential in supporting the post-close transition of the assets to the client. All Land records were set up and updated, notifications were sent to partners/landowners, final accounting adjustments were completed, and Sproule ERCE continues to manage the ongoing Land department functions for the client.
Values:
Fit for Purpose, on Demand Solutions: Sproule ERCE Asset Management was able to provide next day, turn-key Land support, that enabled the client to quickly conduct due diligence and close the transaction in the face of tight deadlines.
Efficient Expertise: Sproule ERCE Asset Management was positioned to provide the right Land expert for the right task throughout the project. Whether it was a Land negotiator, contract analyst, or a mineral, surface or JV administrator, we had the right person for each step along the way, which ensured efficient use of time and resources.
Cost Effective: Sproule ERCE Asset Management continues to cost-effectively manage the client’s Land function. Land personnel handle the day-to-day functions on an “as needed” basis, eliminating the need for the start-up client to hire and manage multiple part-time employees or contractors. This enables the right person, on the right task, for the right amount of time, maximizing value.
Efficient Expertise: Sproule ERCE Asset Management was positioned to provide the right Land expert for the right task throughout the project. Whether it was a Land negotiator, contract analyst, or a mineral, surface or JV administrator, we had the right person for each step along the way, which ensured efficient use of time and resources.
Cost Effective: Sproule ERCE Asset Management continues to cost-effectively manage the client’s Land function. Land personnel handle the day-to-day functions on an “as needed” basis, eliminating the need for the start-up client to hire and manage multiple part-time employees or contractors. This enables the right person, on the right task, for the right amount of time, maximizing value.