HOUSTON, August 19, 2019 – Elevate Midstream Partners, LLC (“Elevate”), a full-service midstream company headquartered in Houston, Texas, today announced that it has entered into an eight-year gas gathering and treating agreement with Sabine Oil and Gas … Already have an account? Similar to gathering and transportation services for produced oil and gas, gathering and transportation related to produced water often requires substantial upfront capital investment from the water midstream company, with the expectation that the investment will be recouped over time through fees charged to the E&P company (either through rate of service agreements or minimum volume commitments). (1) The midstream agreements "touched and concerned" the Debtors' oil and gas leases. July 30, 2020, Under the Bankruptcy Code, not only can the initial recipient of a fraudulent conveyance be held liable, but so too can a subsequent transferee. If a gathering or disposal agreement is a contract that imposes real property covenants on the oil and gas lease, it affects not only the value of lessee’s interest in production but also the lessor’s royalty interest. Privacy Policy. }); Webcast Date: Tuesday, January 26, 2021 | Expert panelists will weigh the typical pros and cons that come with buying or building solutions. Sabine Oil & Gas Corp. (In re Sabine Oil & Gas Corp.) , 2017 BL 83510 (S.D.N.Y. Francis J. Lawall and Marcy J. McLaughlin Smith | This agreement promises to deliver 50% of the production from the wells in exchange for an upfront payment that was already paid to the predecessor. Under the Gas Gathering Agreement and the Condensate Gathering Agreement Sabine exclusively dedicated all of its production from the covered areas to be shipped on Nordheim’s gas and condensate gathering system. Touch and Concern Solving the Buy vs. Failure to properly understand these contracts can lead to higher than expected cost through unidentified fees, poor economic performance through reduced profit margins, or increased downtime. This article will introduce dedication, which is one of the primary components of these agreements and also raises awareness of related key legal and commercial issues. About Us / All Rights Reserved. var myDate = new Date(parseInt(1610344804000)); Sign In Now, Law Prof Who Spoke at White House Rally Abruptly Retires Amid Calls for His Firing, First Trump, Then His Businesses: Some Firms Flee, While Others Lay Low, A Lawyer at the Capitol Riots Defends Himself as Some Call for Disbarment, For Partner Pay, Firms Increasingly Look to Profitability, Drumroll, Please: The 2020 American Lawyer Industry Awards Winners. Every day. Two producers operate in neighboring sections in Oklahoma and each section is dedicated to a different midstream service provider. Commentary Rejecting Midstream Gathering Agreements in Bankruptcy—Yes, No, Maybe? Mintzer Sarowitz Zeris Ledva & Meyers LLP With Profound Sadness Mourn the Loss of Jason G. Wehrle. FAQ / The result is an asset burdened with the equivalent of a 50% override, something that no amount of reservoir due diligence can overcome. January 13, 2021. Natural gas, on the other hand, can only be stored in huge underground salt domes that only exist in certain parts of the country. var pday = moment(myDate).format("MMMM DD, YYYY"); Your article was successfully shared with the contacts you provided. This infrastructure costs billions of dollars and disruption along any part of this system can severely impact profitability by curtailing production, shutting in both oil and gas from affected wells. }); Find out how B2B marketers in the legal, financial, insurance, and commercial real estate markets are using ABM to successfully drive leads and get business from key accounts. document.addEventListener('DOMContentLoaded', function() { The Pipeline Safety Act of 1992 gave PHMSA the authority to regulate rural gas gathering lines. On a well by well basis, this is equally important on a small acquisition as a large one. Appx. Legal Compass includes access to our exclusive industry reports, combining the unmatched expertise of our analyst team with ALM’s deep bench of proprietary information to provide insights that can’t be found anywhere else. Many of these are expired, however, one is a simple volumetric production payment, easily overlooked. March 8, 2016), this language works with assignment language elsewhere in the agreement to ensure that any transfer of ownership of the dedicated well or acreage takes with it the terms of the agreement. }); In response to the ongoing pandemic, many federal agencies and state legislatures have revised their rules to allow for broader utilization of online solutions to remotely conduct business. GAS CONTRACTS AND AGREEMENTS GAS CONTRACTS AND AGREEMENTS Unlike oil, gas cannot be moved by truck or similar methods; it must be gathered and sent to a sales point. Tailored just for you. For example, in. The resultant surge in restructuring activities, including Chapter 11 proceedings, among gas and oil producers is the highest in years. Under the agreements Sabine was also required to pay certain expenses and minimum transportation fees regardless of throughput. S.D.N.Y. Genesee Energy Oil & Gas Furnace Maintenance Agreements Studies have shown that regularly scheduled maintenance may reduce your utility costs by up to 20%. A note to our customers: Genesee Energy is continuing to monitor the ever changing circumstances of the COVID-19 virus. March 8, 2016, Bowers Oil & Gas, Inc. v. DCP Douglas, LLC, To protect themselves from having to operate an unprofitable asset and filing for bankruptcy, midstream companies frequently use vague or overly broad “uneconomic” clauses to force a renegotiation of an offtake agreements’ commercial terms. Nothing on this site should be taken as legal advice for any individual Advertise With Us/ var myDate = new Date(parseInt(1610638906000)); Build Software Debate: Important Considerations to Explore, Follow Legalweek(year) will bring together thousands of legal professionals for a series of 5 innovative virtual legal events. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. In the Badlands case, a Colorado bankruptcy court applying Utah law found that the gas gathering and processing agreement at issue in the case created real property covenants that could not be rejected. It will also discuss how dedication relates to a land manager’s role in negotiating the purchase and sale of leases and gas production. January 14, 2021, Employees will still require leave if they test positive for the virus, are exposed to the virus, or need to tend to children who are physically not in school. The services performed under a gas gathering agreement typically include treating the raw gas from the wellhead to remove hydrogen sulfide and carbon dioxide, dehydrating the gas to remove excess water, moving the gas from the wellhead to a processing plant, and compressing the gas. As to the first element, Judge Isgur found that gathering agreements "touch and concern" the oil and gas leases because "both the benefits and burdens of the covenants … On September 30, 2019, the United States Bankruptcy Court for the District of Colorado (Bankruptcy Court) rejected a debtor’s attempt to sell assets free and clear of a Gas Gathering and Processing Agreement (GPA) and Agreement for Disposal of Salt Water (SWDA), … The assets are anchored by a long-term gas gathering and processing agreement with XTO Energy Inc. A weekly, curated selection of our international content from around the globe, across the business of law, in-house, regulatory, technology and more, with expert insights from our senior editors. One producer force pools the other, drills a well on their portion of the pooled acreage, and connects the well to their gatherer. Law Offices of Gary Martin Hays & Associates Get the timely legal news and critical analysis you cannot afford to miss. The result is an asset burdened with the equivalent of a 50% override, something that no amount of reservoir due diligence can overcome. Pennsylvania Accountants, Tax Attorneys, and other Tax Professionals: If you're gearing up for the tax season just ahead, make sure the state's top tax book is in your ... Girardi Keese’s Alleged $10M Debt to Lit Finance Co. Includes Loan to Pa.-Based Firm in NFL Concussion Litigation, 10th Circuit Narrows Scope of Subsequent Transferee Recovery, What Comes Next? document.addEventListener('DOMContentLoaded', function() { Dan Kennedy has spent the last 8 years negotiating oil and gas agreements, including 5 years focusing on midstream agreements at ConocoPhillips Company. Consequentially, gas transportation requires a near-direct pathway from the producing wellhead to the end-user. As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. $("#sub0").append( pday ); By adding crude gathering, Blue Mountain can now provide our E&P customers a full suite of midstream services complementing our existing gas gathering and processing and water management services. S.D.N.Y. It is with great pleasure that we welcome the esteemed former supreme Court Justice Richard T. Aulisi to our legal team at Belluck & Fox, LLP. var pday = moment(myDate).format("MMMM DD, YYYY"); Yearly regular tune ups also drastically reduce the likelihood of emergency Mar. The gathering system can transport over 450 MMcfd of raw gas. In 2020, we’ve become all too familiar with the struggles of some of our most profitable retailers, airlines, movie theaters, and manufacturers, as well as the gas and oil producers upon which many of these industries rely. It passes through hundreds of miles of gathering lines, treaters, dehydrators, compressors, processing plants, and fractionators. An example of a dedication clause in a contract follows: With a few notable exceptions (see In re Sabine Oil & Gas Corp., Bankr. Contact Us / Coronavirus-Related Leave After the FFCRA Expires, The Three Keys to a Successful B2B ABM Program. Midstream companies invest substantial capital to construct the infrastructure needed to gather and process the producer’s gas. Use them for competitive intelligence, drafting documents or to get information about transactions within a particular industry or sector. They recoup this cost and generate profit through guaranteed fees tied to the production itself for the life of the contract. Premier research university seeks 7+ year attorney with strong background drafting and negotiating complex contracts to partner with busines... Top Boston litigation boutique seeks 2nd-4th year associate with major law firm training to join collegial group. | Consider a situation where the sale of an asset comes with dozens of agreements, disclosed in the form of several dusty boxes (or more recently, hundreds of pages of illegible photocopies). 64, 2018 WL 2386902 (2d Cir. The recent downturn forced these companies to enforce this language, drastically cutting into producer revenues. With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. In re Sabine Oil & Gas Corp., Bankr. To understand how this may affect the performance of an asset, consider the following examples: In summary, it is in the producer’s best interest to ensure that these agreements are fully reviewed and that all the future impact of the terms and conditions are identified. –Gas gathering/storage agreements & liquefied natural gas (LNG) –Pipeline contracts –Portions of joint operating agreements may “touch and concern” land • In some ways, analysis similar to “typical” executory contracts The Best Management Practices cover a broad variety areas, including locations of the wells, noise and visual mitigation of the operations, groundwater protection, and air quality protection. Sponsored by: Accusoft In exchange, these midstream companies contract with producers for a promise of payment based on the volume of oil and gas gathered, processed, or transported, and dedications of the underlying oil and gas interests/mineral interests and associated acreage. 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