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The Law Reviews

The Oil and Gas Law Review

Edition 4


Published: December 2016Contents

Editor

Editor's Q&A

i) What are the hot topics?

The current hot topics in the oil and gas industry relate to the low oil price environment that has persisted for the last two years and the industry’s response. Oil companies have cut costs dramatically and are in the process of re-evaluating their portfolios to focus on key prospects and raise capital. Some companies have had to restructure their debt or even enter into insolvency proceedings. Although leaving aside the Shell/BG merger there has not been a flood of mega deals as in prior downturns, M&A activity is picking up with well-capitalised companies seeking buying opportunities and new players (including private equity-backed management teams) entering the market.

ii) Tell us about any key legal developments – recent or pending – and their international impact.

Current areas of legal focus include:

a.  Continuing fallout from the Deepwater Horizon incident. Although several years in the past, Deepwater Horizon has caused oil companies and contractors to revisit risk allocations in joint operating agreements, drilling contracts and oilfield services agreements with a view toward better protecting themselves against catastrophic incidents.

 

b.  Focus on anti-corruption. Although always an area of concern for oil and gas companies, the passage of the United Kingdom Bribery Act and the new enforcement policies outlined in the US Department of Justice’ Yates Memo have only increased the importance of having vigorous compliance functions, including enhanced scrutiny of potential contractors and business partners and enhanced anti-corruption due diligence for transactions.

iii) What are the biggest opportunities and challenges for practitioners and clients?

The biggest opportunity, and challenge, for both practitioners and clients is staying nimble and adaptable in an ever-changing industry. Companies that were successful at US$100 oil are under significant stress at US$50 oil. Oil and gas companies have had to rapidly recalibrate their operations and strategies in light of the new price structure, and practitioners have to be ever ready to help their clients adapt in a changing environment.


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