Contract Negotiation

The energy sector is a complex, contract-intensive industry. From leases in the upstream to so-called “blanket” contracts for refined products distribution and marketing, written contracts create the framework for engineering design, operations, risk allocation, and profitability for stakeholders. With more than 80 years of combined experience, Pearson Adair & Co. professionals have reviewed hundreds, if not thousands, of industry contracts, assessed contract value, and evaluated the integration of commercial agreements with technical design/operations worldwide. We are often retained to assist clients with assessment of potential commercial alternatives, development of contract options, evaluation of contract offers, negotiation of contracts/specific terms, and “look back” assessments of existing contracts, including construction contracts, to assess betterment opportunities going forward.

Pearson Adair professionals provide contract negotiation advisory services all along the energy value chain, including project development, construction management, joint asset ownership, marketing and transportation of produced hydrocarbons, including natural gas/NGL/condensate/crude oil, gas gathering and processing, and the like. Our consultants have direct industry experience leading negotiations and contributing expertise as part of large negotiating teams. We maintain an in-house knowledge base to support the evaluation of contract alternatives and develop customized market supply/demand and price forecasts as necessary for energy sector opportunities. Our professionals can provide the full range of contract support services from a one-time review of final draft contracts to the development of initial drafts of complete commercial terms associated with complex opportunity. Whatever your needs, Pearson Adair can support the negotiations necessary to achieve your commercial goals.

Project Development Advisory

Retained by the Department of Revenue and the Department of Natural Resources to analyze and provide input regarding the negotiations with potential developers of the Alaska Gas Pipeline. Analyzed potential project development scenarios, including evaluation of product market supply/demand, expected gas processing scenarios and commercial terms for gas processing and product sales. Provided NGL pricing forecast advice and audited project financial models.

 

Consulting Expert, Gas Processing Contract Negotiation

Retained by producer to provide economic evaluation of existing gas processing contract and recommend potential changes to enhance future economic return for producer.

 

Contract Negotiations, Crude Oil Purchases/Sales/Transportation Contracts

Managed the direct negotiation of purchase, sales, exchange, and transportation contracts for WTI, WTS, and condensate production in West Texas. Negotiations included short-term and long-term purchase and sales agreements with major integrated and independent producers as well as crude oil/condensate marketers and refiners. In addition, completed purchase/sale and exchange of aggregated supplies at market hubs, including Midland, Cushing, and various physical delivery locations on the U.S. Gulf Coast..

 

Contract Negotiation/Dispute Resolution

Retained to assist and advise in-house and outside counsel of independent exploration and production company with respect to dispute over contract dedication of acreage in West Texas. Included renegotiation of existing gathering and processing contract as part of settlement negotiation; drafted proposed contract to replace existing gathering and processing terms and conditions.On behalf of a natural gas utility, inspected pipeline facilities and reviewed natural gas supply and marketing issues for a potential acquisition candidate. Conducted operations review and an analysis of staffing levels.

 

Business Strategy, Management of Royalty Trust

Provided business management, administration, and oversight for $100 million oil and gas royalty trust. Retained by owners of the trust as agent of the General Partner of the trust to manage day-to-day business functions, confirm production, invoice and confirm payments, and administer oil and gas marketing contracts as necessary. Managed the transition of the agent from Enron-affiliated management post-bankruptcy.

 

Lease Negotiation/Royalty Interests

Retained by counsel for royalty owners to evaluate gas conditioning and processing facilities for gas with more than 30 percent acid gas in central Texas. Advised counsel with respect to reasonable expectations for gas shrink, fuel utilization, and on-going costs associated with gas production and sale.

 

Business Strategy, Negotiation of Royalty Provisions in Producing Lease

Retained by royalty trust to evaluate proposed gas production and gas processing operations for very sour gas production in central Texas. Evaluation included review of the existing field and plant facilities, expected gathering and processing costs, and gas processing economics. Provided recommendations regarding commercial terms as proposed by the operator and relative value implications for the royalty trust.

 

Workout Advisory 

Led assignment to evaluate the operation and administration of an independent oil and gas production company in breech of existing loan covenants. Provided assessment of overall business valuation to lender group. Advised lenders regarding on-going business operations, repayment options, and restructuring of loan covenants.

 

Acquisition Negotiation and Evaluation

Completed economic evaluation and negotiation for acquisition of a 200 million standard cubic foot per day gas treating and compression plant. Project responsibilities included negotiation of gas purchase and sale agreements, the evaluation of carbon dioxide contracts and market alternatives, and the determination of the overall condition of plant assets.

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