THE AM LAW DAILY

SURVEYS AND RANKINGS

MAGAZINE

SPECIAL REPORTS

The Work

January 4, 2012 6:08 PM

Am Law Firms Start New Year Advising on Pair of Multibillion-Dollar Shale Deals

Posted by Tom Huddleston Jr.

The shale assets sector kicked off 2012 with a pair of major deals, as French oil company Total and China's Sinopec International Petroleum Exploration and Production (SIPC) announced separate acquisitions topping $2 billion apiece from a pair of Oklahoma City–based companies.

Devon Energy said early Tuesday that SIPC has agreed to pay $900 million in exchange for a one-third stake in five different Devon operations, including one located in the Utica Shale region and the others involving petroleum and shale deposits elsewhere the United States. The purchase price is to be paid in cash upon closing of the deal, which is expected in the first quarter of the year. SIPC has also agreed to pay Devon as much as $1.6 billion in future drilling costs under the transaction's terms.

News of the SIPC deal came shortly after Total announced that it had agreed to buy a 25 percent stake in Chesapeake Energy Corporation's 619,000-acre Utica Shale parcel in eastern Ohio. Terms call for Total to pay Oklahoma City–based Chesapeake roughly $2.32 billion as part of the joint venture, which was signed and completed on December 30, according to the announcement.

The Utica Shale formation covers parts of the eastern Ohio area that experienced a magnitude 4.0 earthquake last week. The quake—the latest and most severe in a recent string of temblors in the area— has fed speculation that the hydraulic fracturing process—a.k.a. "fracking"—involved in collecting the natural gas located in shale formations could increase earthquake risks in areas not normally accustomed to such activity, including eastern Ohio. 

That speculation has not stopped energy companies from gobbling up shale assets, with the sector seeing such a surge of M&A action last year that several firms found themselves scrambling to snap up lateral hires who could cater to energy industry clients, as Am Law Daily sibling publication The Legal Intelligencer has previously reported.

For its part, Chesapeake has been shedding its shale assets as part of a plan to reduce its long-term debt by 25 percent, to roughly $9.5 billion, by the end of this year. The company said Wednesday that it is well on its way to achieving that goal thanks to deals like the one struck with Total, as well as last February's $4.75 billion sale of Fayetteville Shale interests to Australian mining giant BHP Billiton.

For legal advice on the BHP deal transaction, Chesapeake turned to longtime outside counsel C. Ray Lees, as well as lawyers from Wachtell, Lipton, Rosen & Katz and Wilmer Cutler Pickering Hale and Dorr. Lees, a member and M&A partner at Oklahoma City firm Commercial Law Group P.C. who was named Dealmaker of the Week for that matter, is also advising Chesapeake on the Total deal.

The pair of shale deals also kept Fulbright & Jaworski busy, as the firm advised both Total, in its agreement with Chesapeake, and SIPC on the deal with Devon. The Fulbright team working for Total includes Houston-based energy and real estate partner Deborah Gitomer, as well as energy partner Craig Vogelsang, real estate partner William Sing, environmental partner Eva Fromm O'Brien, and tax partner Robert Phillpott. In Dallas, energy partner Mark Wasem and corporate partner David Morrison also advised.

SIPC's acquisition of a stake in the Devon operations is the latest transaction in which it and its parent company—China Petroleum and Chemical Corp. Ltd., which is also known as Sinopec—have stocked up on energy assets. In October, Sinopec said it would pay $2.1 billion to acquire Canadian oil and gas exploration company Daylight Energy. In November the company announced a $5.2 billion investment in the Brazilian assets of Portuguese oil and gas company Galp Energia SGPS S.A..

Sinopec was advised on both of those deals by its longtime outside counsel, Vinson & Elkins. This time, V&E is on the other side of the transaction, acting as legal adviser to Devon. The firm's team on the matter includes Houston-based M&A partner John Connally, as well as energy partner Shay Kuperman, tax partner Thomas Crichton, M&A partner Todd Way, and antitrust partner William Vigdor.

In 2010, Connally was part of the V&E team advising Devon on its sale of assets in Azerbaijan, Brazil, and the Gulf of Mexico to BP for $7 billion

Lyndon Taylor, the former managing partner of Skadden, Arps, Slate, Meagher & Flom's Houston office, is Devon's general counsel.

For its part, SIPC turned to a Fulbright team that includes Houston-based energy partner Craig Vogelsang, corporate partner Efren Acosta, environmental partner Eva Fromm O'Brien, tax partner Robert Phillpott, energy and real estate partner Deborah Gitomer, and real estate partner William Sing. Washington, D.C., corporate partner Larry Franceski, international trade partner Stephen McNabb, and antitrust partner Daniel Wellington also advised on the deal.

Make a comment

Comments (0)
Save & Share: Facebook | Del.ic.ious | | Email |

Reprints & Permissions

Comments

Report offensive comments to The Am Law Daily.

Post a comment

If you have a TypeKey or TypePad account, please Sign In





By: TwitterButtons.comhttp://www.facebookloginhut.com/facebook-login/


theamlawdaily@alm.com




From the Law.com Newswire

Sign up to receive Legal Blog Watch by email
View a Sample

Advertisement