ENERGY TRANSACTIONS & OPERATIONS
Mr. Walne has decades of experience representing operators and investors in negotiating and preparing leases , contracts relating to the acquisition, development and disposition of oil and gas properties.
Mr. Walne’s energy clients have come from all across Texas and around the world, and his services have been engaged when his clients buy into or exit from domestic oil or gas operations or the occasional international concession. As their counsel, his task is to help identify the potential risks involved with the purchase or sale and to assist them in reaching their goals. Mr. Walne has decades of experience representing operators and investors in negotiating and preparing leases, conveyance instruments, operating agreements and other contracts relating to the acquisition and disposition of oil and gas properties. And he understands the challenges they face on a business level—he has been in their shoes.
With his comprehensive business and legal experience, he provides guidance at every stage of a trade. Mr. Walne will negotiate the necessary documents for a trade and perform the due diligence review of the assets being purchased. He understands that, to be a viable acquisition, any producing property must have certain characteristics. It is important to evaluate everything, including regulatory compliance, liens and encumbrances, consent requirements, preferential rights and breaches or failures of conditions affecting the overall status of title to or ownership of the real or personal property at issue, and engineering reports, economic projections and other financial information affecting the revenue stream being purchased. But no deal is perfect, and Mr. Walne helps his clients discern whether imperfections can be overcome or compel withdrawing from the trade.
Mr. Walne has negotiated, documented and closed a variety of energy transactions including:
Purchase and Sale Agreements
Farmout agreements
Assignments of Net Profits Interests
Joint Operating Agreements
Participation Agreements
Area of Mutual Interest agreements
Pooling and unitization agreements
Saltwater Disposal Agreements
Representative Experience
Multi-state producing property acquisition by an insurance company affiliate
Purchase of working interest in a large-tract horizontal well drilling program by a substantial international exploration and production company
Purchase of operated working interests by an affiliate of a Sweden-based company
Counsel to the purchasers in numerous oil and gas lease acquisitions
Grants of oil and gas leases, seismic permits and surface use agreements by substantial mineral interest owners
Saltwater disposal agreement creating a third-party connection to the operator’s disposal facility
Assisting a working interest owner’s effort to prevent a non-paying co-participant from riding a well down in bad faith under a minimal non-consent penalty, which otherwise would have prevented the drilling of the well (confirmed by the Texas Supreme Court in the litigation that ensued)
ENERGY FINANCE
The Firm has represented several regional banks in all aspects of their reserve-based, oil and gas loan facilities, from negotiations and due diligence examinations to drafting and preparation of loan documents. Mr. Walne provides services and produces instruments of the quality his clients expect from midsize and large law firms, and because the Firm is small, it can provide for its clients’ needs at a much lower cost than larger firms can manage. Mr. Walne knows the unique risks associated with oil and gas collateral. Lenders must make certain unavoidable assumptions when analyzing a reservoir engineer’s report and determining the present worth of and potential future revenues from any oil and gas property securing their loans. Mr. Walne’s practice is to carefully evaluate conveyance instruments, regulatory filings, historical revenue receipts and other information to ensure that his clients’ interests are protected by adequately valued and unencumbered collateral.
This experience with representing lenders benefits Mr. Walne’s borrower-clients as well. By understanding the lender’s needs, Mr. Walne can adapt that awareness to help borrowers navigate the lending process as efficiently as possible, as well as to provide guidance regarding any records, books, reports or other information that must be produced before closing.
Representative Experience:
Representation of the lender in a $20 million revolving line of credit facility secured by numerous properties in multiple jurisdictions
Representation of the lender in a $15.6 million revolving line of credit facility for a small Houston based independent
Representation of the lender in a $15 million revolving line of credit facility secured by shallow offshore properties
Representation of the US subsidiary of a foreign exploration and production company in connection with a $100 million limited recourse financing by an international banking institution
Representation of a domestic independent exploration and production company in connection with a $20 million senior secured credit facility provided by a foreign banking institution
Representation of an exploration and production company engaged in a corporate refinancing in connection with the title due diligence component of the transaction
REGULATORY COMPLIANCE & CORPORATE GOVERNANCE
Participants in oil and gas operations are responsible for the compliance of their properties with state and federal regulations. At the state level, there are filing, reporting and bonding requirements that must be approved by the state regulatory authority at every stage of a property’s development. Depending on the number of wells drilled, the type of production involved, the number of times the property is conveyed, the existence of disputes among participants and many other facts, these regulatory requirements can be cumbersome. Counseling clients with respect to these matters to ensure their oil and gas properties are managed properly is a component of Mr. Walne’s practice.
Corporate clients must comply with certain statutory requirements relating to business organizations in general. A significant part of Mr. Walne’s representation involves forming, registering and ensuring that his clients operate their businesses in accordance with applicable laws. Mr. Walne has negotiated a settlement with the Texas General Land Office and the Railroad Commission with respect to the proper abandonment of wells orphaned by a prior lessee in connection with the development of reserves on state-owned lands.
MINERAL OWNERS
Mr. Walne has negotiated and drafted hundreds of oil and gas leases for mineral owners over the years. For small interests, or for small tracts of land, a lease agreement may be on a very simple form. For large tracts and large mineral interests, comprehensive, more sophisticated leases are appropriate, often focusing as much on the protection of the surface as the development of the minerals. An understanding of the concerns of landowner clients is imperative, and having the knowledge of the devices which may be employed to protect and maximize the value of their interests while negotiating and drafting leases that are fair and beneficial to all parties involved distinguishes Mr. Walne’s representation of such clients. Much of the work in this area also stems from unusual but important issues arising after a lease is granted, facilities are constructed and pipelines are laid. Mr. Walne has counseled clients on issues relating to the termination of easements and leases, the rights of a mineral owner under a pooling agreement, mineral trusts and the duties of the trustee, environmental matters and surface damages. Included among Mr. Walne’s landowner clients have been George P. Mitchell, as to his property near Magnolia, Texas, where preservation and restoration of the surface were critical; the owner of substantial lands near Kendleton, Texas, where environmental concerns were significant to that landowner and limited use of the surface was material; and another owner of extensive mineral interests in lands being developed on the outskirts of Houston, where coordination between reasonable use of the surface had to be aligned with the potential development of the mineral estate after the surface had been consumed with commercial business establishments.