“EnergyBuzz: Will Oil Price Drop Trigger Change for Firms?”
With the dramatic drop in per barrel oil prices in recent weeks, Texas Lawyer asked lawyers at firms known for their work in the industry this question: What are the three most significant consequences of that trend on the firm’s O&G practice? Their answers are below, edited for length and style.
Richard B. Hemingway Jr., oil and gas practice leader and a partner in Thompson & Knight, Houston:
“The drop in oil prices continues to have an immediate impact on our deal flow, both M&A (or corporate) deals and A&D (or asset) deals. We have upstream and midstream deals that are proceeding to closing as planned, and we have deals that currently are on hold. Of those on hold, some will proceed on a renegotiated basis; the rest will be scuttled completely. Interestingly, through all of this, we are seeing an increased interest in clients wanting to acquire U.S. domestic natural gas assets. For the near term and with respect to our E&P clients, we have already started to assess who will continue with business as usual, and who will need to revisit their business plans and their capital needs and to take appropriate corrective or curative actions. For the near term and with respect to our capital provider clients, we have already started to ascertain who will proceed with business as usual, who will have changing investment strategies and who will have an appetite for investing in distressed assets and distressed companies. Much of what the capital providers decide to do will directly affect what many of the E&P companies can do.