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October 31, 2011 7:38 PM

DLA, V&E Advise on TNK-BP's $1 Billion Brazilian Exploration Deal

Posted by Tom Huddleston Jr.

UPDATE: 11/1/11, 11:00 a.m. EDT. Skadden, Arps, Slate, Meagher & Flom is advising AAR on this matter, with Moscow-based M&A partner Linda Davies leading the firm's team.

CORRECTION: 11/1/11, 11:00 a.m. EDT. This post originally misstated Boyd Carano's location. He is based in V&E's Palo Alto office. We regret the error.

Moscow-based TNK-BP announced Monday that it will pay $1 billion for a 45 percent stake in the Solimões Basin project to pursue oil and gas deposits in the Amazon basin in Brazil.

The deal is the first in Brazil for TNK-BP, a joint venture between British oil giant BP and a consortium of Russian investors known as AAR. The company will pay Rio De Janeiro–based HRT Participacoes em Petroleo $1 billion over a two-year period for a share of 21 oil and gas exploration blocks that cover roughly 18,725 square miles, according to statements from TNK-BP and HRT.

TNK-BP will have the option of acquiring another 10 percent of the project, giving it a controlling stake, for an undetermined price within two and a half years of the transaction's closing, according to The Financial Times.

Initial production from the Solimões project is expected to begin in 2012.

TNK-BP has hired DLA Piper and Brazilian firm Campos Mello Advogados as outside counsel on the transaction.

DLA's team is being led by Palo Alto–based corporate partner Michael Bolton, assisted by Moscow-based corporate partner Feruz Fidaev. In 2009 DLA advised TNK-BP on its acquisition of two oil storage facilities and 36 gas filling stations in Ukraine.

Campos Mello partner Luiz Antonio Lemos is leading his firm's team, which is serving as local counsel on the matter. Legal Week reported last year that DLA had signed an alliance with Campos Mello for work on local matters.

TNK-BP's executive vice president for legal support is Igor Maydannik.

Vinson & Elkins is advising HRT on the transaction. The firm's team is led by energy transactions partner Boyd Carano, in Houston, assisted by litigation partners Alden Atkins and Amy Riella, and energy transactions partner John Connally.

The agreement comes as TNK-BP prepares for a potential multibillion-dollar legal battle with BP. The FT reported October 24 that the Russian outfit's management had recommended that the TNK-BP board of directors sue BP for damages caused by a failed exploration deal the British company signed with Rosneft. Lawyers at Fried, Frank, Harris, Shriver & Jacobson and Shearman & Sterling have advised TNK-BP's management that the company should pursue legal claims against BP, which is already facing suits from other TNK-BP shareholders, according to the FT.

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