Private Equity

Private Equity Oil & Gas Transactions: Insights for Buyers and Sellers

Shearman & Sterling LLP

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2 ABOUT THE AUTHOR Sarah McLean, a partner in Shearman & Sterling's Energy Transactions practice in Texas, has over 20 years of experience as a trusted advisor to private equity funds and management teams focused on the energy sector. She has represented them in connection with portfolio company investments, acquisitions and divestitures of upstream and midstream oil and gas assets and companies, formations of joint ventures, and various private equity transactions, project documents and operating agreements across the entire oil & gas value chain. After growing up in northwest Oklahoma, she obtained a B.S. in Biochemistry and Molecular Biology, with honors, from Oklahoma State University and a J.D. from the University of Texas School of Law. Sarah and her children are active volunteers with Generation Serve and the recipients of the 2018 Wally Pilcher Family Volunteering Award. Sarah can be contacted at sarah.mclean@shearman.com. Preface Private equity funds have supplied much of the capital injected into the oil and gas exploration and production sector over the last decade. These investors will typically seek to identify, acquire, operate, enhance, and ultimately exit from an investment within a defined investment period. Assembling a strong management team at the front end of an investment and maximizing returns with a clean exit at the back end are two key areas of focus for a typical private equity fund investor, and these points often drive considerations for the counterparties in private equity deals. The intent of this chapter is to provide an overview of key concepts and provisions likely to be raised (other than with respect to tax provisions) when negotiating purchase and sale agreements (PSAs) with private equity-backed companies. The provisions discussed and solutions suggested in this chapter are not in any way meant to be exhaustive either as to the provisions that impact Buyers and Sellers who do business with PE Sellers or PE Buyers or as to the compromises with respect to such provisions, but are intended to assist counterparties that find themselves buying oil and gas assets from, or selling those assets to, private equity-backed entities.

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