Due diligence and warranties in oil and gas M&A transactions
Produced in partnership with Giulia Carloni
Due diligence and warranties in oil and gas M&A transactions

The following Energy guidance note Produced in partnership with Giulia Carloni provides comprehensive and up to date legal information covering:

  • Due diligence and warranties in oil and gas M&A transactions
  • Due diligence
  • Oil and gas due diligence and warranties
  • Warranties—some practical considerations

Due diligence

In common with mergers and acquisitions (M&A) transactions generally, prior to executing an acquisition in the context of the oil and gas sector, a buyer will want to ensure that it has undertaken satisfactory due diligence on the relevant assets (and/or entity in the event of a share purchase). Any relevant findings will provide the buyer with the opportunity to negotiate certain specific warranties and/or indemnities. However, the nature of the assets being acquired in the oil and gas sector and the business environment which applies means that there are a number of sector-specific areas of due diligence. This Practice Note includes particular focus on these sector-specific areas. For content on M&A transactions more generally, see: Due diligence and disclosure (share purchase)—overview and Due diligence and disclosure (asset purchase)—overview.

The key documents typically encountered at the early stage of the due diligence process are as follows:

  1. a ‘teaser’

  2. a confidentiality agreement

  3. an information memorandum; and

  4. a first draft of the acquisition agreement provided by the seller

The due diligence process usually begins with the seller issuing a ‘teaser’ in respect of the oil and gas transaction. This document may vary but it usually contains the following snapshot information:

  1. maps/acreage of the area in which the relevant assets are located

  2. production data in respect of the oil or gas being