Client Objectives, Risk Allocation and Contract Drafting
A key part of oil and gas contracts is identifying the matters that are of the most significance to our clients so that we can seek to achieve the agreement goals of our clients. In addition to price issues, often there are many critical matters that must be understood, such as on-time performance and allocation of risk for unknown matters. Before drafting or negotiating an agreement, we identify with clients the aspects that are the most important to them, so that we can draft contracts accordingly.
We are frequently retained to negotiate many of the significant legal contract terms on behalf of our clients. Typically, these terms concern risk allocation, defining the rights and obligations of parties to ongoing contractual matters (such as joint ventures), identifying special rights that may arise in certain circumstances (such as a failure to make capital contributions or achieving earn-in), and matters that require precise definition (such as the acceptable deductions in a net profits interest calculation).
Addressing Likely Scenarios in Ongoing Contractual Relationships
Many oil and gas contracts include ongoing relationships between parties, such as joint ventures, earn-in agreements, and master service agreements. Our role as oil and gas contract attorneys is to identify with our clients the types of matters and conditions that may arise.
While neither we nor any other lawyers can foresee all circumstances that may arise, situations that frequently occur (such as the inability of a partner to make a required capital contribution) can be contemplated in an agreement. Our goal in ongoing contractual relationships is to identify the likely events that could arise and to provide clear contractual mechanisms for resolving or handling such matters if, in fact, they do arise.