In a recent decision, In re Black Diamond Mining Company, LLC,[1] the United States Court of Appeals for the Sixth Circuit held that a netting provision contained in a contract was enforceable against an assignee from one of the parties to the contract. The decision is sound, and is worth noting by parties to contracts and by those parties that succeed to their rights
Today’s blog article, which looks at offshore leases in the United States, is the fourth in a Weil Bankruptcy Blog series, “Drilling Down,” a series that will look at issues at the intersection of the oil and gas industry and bankruptcy law. In Part One we provided an overview of the oil and gas industry, in
Reduced Liquidity—How Will Oil Companies Feel the Pinch?
Today’s blog article, which looks at the ability of a debtor to assume, assign, or reject oil and gas “leases” under section 365 of the Bankruptcy Code, is the third in the Weil Bankruptcy Blog series, “Drilling Down,” where we review issues at the intersection of the oil and gas industry and bankruptcy law.
The recent drop in crude oil prices has been a boon to consumers and businesses alike. However, sustained lower crude prices will invariably have a negative impact on drilling activity in those states where oil and gas development has been concentrated. The current price is below production costs in some locations. Without a prompt recovery in prices, it can be expected that a sustained decrease in oil and gas activity will have an adverse financial impact on the myriad of businesses that provide supplies and services in the oil and gas sector.
For the past several years, low interest rates and higher commodity prices have resulted in generally favorable financial conditions in the energy sector, keeping energy bankruptcy activity to a minimum. With the recent sharp decline of prices in numerous commodities and forecasts of higher interest rates in the near future, there is a likelihood that the financial condition of some companies in the energy and commodities sectors could deteriorate significantly.
Oil price movement through 2014 and into 2015 is a consequence of market fundamentals. Europe’s continued economic woes, paired with the slowdown in China’s economy, have led to a fall in demand for oil.
At the same time, the growing U.S. shale-oil boom (over which OPEC has no control) and the pick-up in drilling in Libya have led to an excess of supply. However, in the past few months the issue has switched from how quickly oil prices have fallen, to how much further they have to fall.
There is a lot of chatter around the water cooler about how falling energy prices puts energy companies and service companies into distress, and—importantly for private equity investors with liquidity—provides an opportunity to acquire energy assets at distressed prices. In part one of this posting, I provided a very basic hypothetical to help la
Today’s blog article, which looks at the treatment of specific oil and gas property interests in the bankruptcy context, is the second in the Weil Bankruptcy Blog series, “Drilling Down,” where we review issues at the intersection of the oil and gas industry and bankruptcy law.