drillers and dealers june 2011

8/6/2019 Drillers and Dealers June 2011

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Special Legal Focus

Drillers and Dealers ::: ::: June 2011 Edition

Guest Foreword

Written by Greg Hammond, Partner, Akin Gump Strauss Hauer & Feld and Chairman of The Oil Councils Legal Committee

It is hard to believe that The Oil Council has now already been in existence for over 18 months.

In that time a long list of members and partners has evolved which some other longer-established energyindustry organisations must surely be eyeing with awe and a certain amount of envy. Doubtless, there are anumber of reasons which would explain this rapid progress but one of them certainly has to be the over-archingpolicy maintained by The Oil Council from the outset that its main focus should be on the oil and gas dealsthemselves, together with the companies and investors which put those deals together.

It is, therefore, perhaps a sign of the maturity of The Oil Council that a group of us has recently been asked to (i)establish a Legal Committee; and (ii) inaugurate a Special Legal Edition of Drillers & Dealers to be publishedannually. The first edition of the latter is in front of you now. Before the non-lawyers amongst you hurriedly flipthe pages in abject disappointment, you may wish to reflect first on some of the legal and regulatory issues facingthe oil industry in the 21st century (which increasingly appear on the front page of your daily newspaper) andthen consider the mission statement below which the Council has presented to us.

Our brief is to avoid the trap of being overly legalistic or overly focused on documentation. Instead, we have beenasked to provide thought -leadership and content on the key legal issues of the day, in a format which is directlyrelevant and accessible to all members.

Over the next few weeks a full Legal Committee will be appointed which will regularly source from Oil Councilmembers (across the widest range of industry skill-sets and geographical coverage achievable) the necessaryexpertise on the hottest legal topics. Given that The Oil Council is as much focused on capital raising and M&Aas it is on farm-ins and unitisation, one should expect that (uniquely compared to other energy industryorganisations) content will continue to be drawn from transactions executed both at shareholder-level as well asat asset-level.

Key areas on which we will be looking to provide insight in the coming year include the following:

1.

Issues arising from the Deepwater Horizon/Macondo incident in the Gulf of Mexico and how they may have knock-on effects for deepwater drilling elsewhere in the world; 2. The increasing interest in unconventional oil and gas especially in the next generation territories

outside the US, where the different regulatory regimes and environmental circumstances are already giving rise to stark variations in approach;

3. Legal trends in capital raising, whether in the area of equity (such as the increasing use of the SPAC as a listing vehicle, as exemplified recently by companies such as Vallares PLC) or in the area of debt (with the current resurgence in reserves-based lending and hybrid instruments such as convertible bonds);

4. Those parts of the world which look set to be utterly transformed by the potential and also challenges presented by their oil and gas reserves (including Brazil, Iraq, parts of Africa and the Arctic) and how their legal systems will evolve to meet those challenges;

5. Issues arising in the area of transportation and infrastructure, particularly in light of the projected growth in the demand for gas as a fuel-source; and

6. Occasional changes in law and regulation relevant to natural resource companies listed (or applying for listing) on the leading global stock exchanges.

Over the coming months The Oil Council also plans to establish an Investors Committee and a FinanceCommittee, both of which are expected to work together with The Legal Committee. These Committees will seekto provide guidance to Oil Council members and the wider industry across their respective disciplines in spottingtrends, breaking through jargon and increasing understanding by sharing the experience of others in real-time.

For our part, the Legal Committee will have one mantra of its own which will be to present legal knowledge as ameans of empowering its audience in the conduct of its daily commercial business - by offering up alternativesand adding value not as a piece of red tape which must be painfully endured before leading to an uncertainoutcome.
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Welcome to Drillers and Dealers June 2011


Contents

Guest ForewordGreg Hammond, Partner, Akin Gump Strauss Hauer & Feld

Update on The Oil Councils Global Activities

Special Focus on Legal Issues and Challenges

Natural Gas Comes of Age

4

7

8

Paul Griffin, Partner, Allen & Overy and Global Oil & GasLawyer of the Year, 2010 (Whos Who Legal Awards)

What, From a Legal Perspective, Are The TwoMain Legal Issues Challenging Your ClientsToday?Stuart Carter, Partner, Bond Pearce

11

Oil & Gas Agreements: Negotiations With TheStateDr Ken Mildwaters, Founder and Managing Partner,Mildwaters Consulting

12

ON THE SPOT WITH THE GCSWhat Are The Legal Issues That Are KeepingYou Up At Night In 2011?

15

General Counsel Perspectives from Across the Globe

News Release: Launch of our Legal Committee

THE LEGAL CORNER"What Legal Steps Must Companies Take ToReduce Operational Risk?"

18

20

Legal Perspectives from Across the Globe

OC Columnists Whats New Online? 23

Meet The Member 25

Copyright, Commentary and IP Disclaimer: *** Any content within thispublication cannot be reproduced without the express permission of The Oil

Council and the respective contributing authors. Permission can be sought by contacting the authors directly or by contacting Iain Pitt at the above contactdetails. All comments within this magazine are the views of the authorsthemselves unless otherwise attributed to their company / organisation. They are not associated with, or reflective of, any official capacity, or any otherperson in their company / organisation unless so attributed ***

Drillers & Dealers

Official Publication of The Oil Council3rd Floor86 Hatton GardensLondon

EC1V 8QQ, UK

Editor

Drake Lawhead Vice President, Content and [email protected] T: +44 (0) 20 7067 1873

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Iain [email protected] T: +27 (0) 21 700 3551

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Ross Stewart [email protected] T: +44 (0) 20 7067 1877

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Vikash MagdaniExecutive Vice President, CorporateDevelopment [email protected] T: +44 (0) 20 7067 1872

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Special Announcement


Update on our Global Activities from LON to NYC to HOU

Last week, we returned from an unseasonably balmy Houston the last stop on our three-city whistle stop tour which saw usconnecting with our Partners and Members at cocktail receptions we hosted (with our gracious Partners Akin Gump andBracewell & Giuliani) in New York, London, and Houston.

Over 200 people attended the event at Bracewells offices in Houston, which featured not just some great meetings andconversations amongst senior oil and gas executive, but a no-expense spared Martini bar to boot.

Weve really enjoyed hosting these events, and will continue to do so in our annual calendar to meet as many of you aspossible and do what we do best put you in touch with new friends and potential business partners.

For now, our attention turns to our World Oilfield Services Assembly and Summer Ball on June 29-30 in our very own backyardof London.

One new development we want to share with you: many of you will at some point have spoken with Vikash Magdani, ourExecutive Vice President of Business Development. Vikash is moving to New York to head up The Oil Councils activities in theAmericas, opening an office near Bryant Park. We continue to strengthen our network in the Americas and this move allows usto keep in touch more closely with our Partners and Members in New York, Houston, Calgary, and elsewhere.

We wish you a prosperous rest of 2011 and hope to see you at one of our Assemblies this year.

Drake Lawhead and The Oil Council Team

many thanks again to the Bracewell & Giuliani team for their fantastic hospitality.

Attending companies on June 9th includedAdino Energy Corp, AIG Asset Management, Albrecht & Associates, AnadarkoPetroleum, Anglo Suisse Offshore Partners, Ankor Energy, Apache Corp, Ascendant Securities, Asset Risk Management, ATP Oil & Gas, Bank of Texas, BP, BPZ Energy, BTM Advisors, Buccaneer Resources, Burleson LLP, Canaccord Genuity, CIMAEnergy, Clarey/Napier International, Commonwealth Bank of Australia, Credit Agricole Corporate and Investment Bank, Credit Suisse, Davis Petroleum Corp, Deloitte, Dewey & LeBouef, Dynamic Offshore Resources, EnCap Investments, Energy International Group, EnerVest and Enhanced Oil Resources, ENI Petroleum, Ernst & Young, ESS Funds, Evolution Petroleum Corporation, First Reserve, Focus Exploration, Fractal Systems, Frost Bank, Gaffney, Cline & Associates, GasRock Capital, GE Financial Services, Goldman Sachs, Goodrich Petroleum Corporation, Graves & Co, Harvest Petroleum, Heidrick & Struggles,

Houston American Energy Corp, IBERIABANK, IHS CERA, JMR International, JP Morgan, KBC Advanced Technologies,Kessey Capital Partners, Key Energy Services, Korn Ferry, Legado Resources, LINN Energy, Lloyds Banking Group, Louis Dreyfus Highbridge Energy, M1 Energy Capital and Macquarie Bank to name only a few

You can contact the B&G team directly u sing the following information

Steve TredennickPartnerHouston

Bracewell and GiulianiT: +1 713.221.1459F: +1 713.222.3236

E: [email protected]

Mark EvansManaging Partner, Firm

HoustonBracewell and Giuliani

T: +1 713.221.1300F: +1 713.221.1212


Gray MuzzyPartnerHouston

Bracewell and GiulianiT: +1 713.221.1571F: +1 713.221.2109


Bracewell & Giuliani LLP is an international law firm with 470 lawyers in Texas,New York, Washington, D.C., Connecticut, Seattle, Dubai, and London. We serve Fortune 500 companies, major financial institutions, leading private investment funds, governmental entities and individuals concentrated in the

energy, technology and financial services sectors worldwide.
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8/27

Special Legal Focus


Natural Gas Comes of AgeWritten by Paul Griffin, Partner, Allen & Overy and Global Oil & Gas Lawyer of the Year, 2010 (Whos Who Legal Awards)

For many years, natural gas has been the less important hydrocarbon in the oil and gas business, but recent times have seen apotential change. Many indications suggest that natural gas is gaining a higher profile in the commerce and politics of the oiland gas business. Some would even go so far as to say that we are entering the age of natural gas.

The difficulties of containing and transporting natural gas meant for many years a limitation of markets to those closest to thepoints of production. But the development of ever-longer pipelines and, particularly, the growth of liquefied natural gas (LNG)have enabled natural gas to reach ever more distant markets.

While pipeline distances are inevitably limited, this is not the case with LNG which, over the last decade, has seen itstraditionally regional and separated markets move towards a more homogenous, single, global market.

There has also been a growing separation of the previously connected markets for oil and natural gas with natural gas prices inthe United States and Europe coming to reflect the value of natural gas in its own right. Perhaps more significantly, the growingdevelopment of unconventional gas (in the form of shale gas and coal seam gas and often close to major consumer markets)has also led to a concentration on natural gas in its own right.

The natural gas reserves of the former Soviet Union and the Middle East have long constituted the worlds major reserves butremain comparatively distant from the traditional consumer markets of the United States, Europe, Japan and Korea and thedeveloping markets of China and India. But this balance has been thrown into doubt by the recent and rapid development of theUS shale gas business.

Whilst a number of developments are at early stages, the current view is that these unconventional gas reserves are veryconsiderable and have the potential to move the projected supply and demand balance in the US from one of recent shortageto one of future abundance; and for decades to come.

Given the long lead-time for LNG developments particularly, a number of production facilities intended towards deliveries to theUnited States are now likely to have to find alternative markets for their production.

Also, Australia is seeing a considerable enhancement of its LNG production capability with an increase of its LNG productionfrom the traditional natural gas reserves of Western Australia as well as the development of new LNG production facilities inQueensland. This represents the commercialisation of coal seam gas reserves with intended sales towards, primarily, North

Asian markets.

These effects on supply and demand in the worlds LNG sector are combining to create a more global market in natural gas, aswell as a connection in the prices of LNG among the previously segregated markets of the Americas, Europe and North Asia.

Some recent transactions are also showing how gas is becoming the focus of strategic deals. One example is the entry by BPinto a joint venture with Reliance Industries in relation to the gas market in India.

This deal sees BPs participation in upstream produ cing interests in gas fields offshore India as well as a joint venturearrangement for the marketing of gas and LNG within India.

The pace of recent development of the worlds LNG markets contrasts with the pace of development of major cross -borderpipeline links. These arrangements are necessarily dependent on treaty arrangements among the relevant states, whether asproducers or consumers of natural gas, or transit states in-between.

The development of cross-border pipelines from Egypt to Israel and among the states of the former Soviet Union towardsEurope provide examples of the long time necessary to put in place the required political arrangements as well as thecommercial arrangements allied to the long-term sale and purchase of natural gas through those pipelines.

The oil and gas business has long had a close interrelationship with politics and geo-politics and times of change have meantuncertainty for the oil and gas business over time.

This has been the case over recent years with increasing state participation in its petroleum sector whether at the timeinvestments are made or over time with moves towards resource nationalism in many jurisdictions. In some cases, these stepshave taken the form of direct interference or, in case of a number of OECD states such as the UK, Australia and Israel, thechanging of tax rates and fiscal terms.

These steps may also lead to distortions in markets, with a notable example being seen in the Middle East where acombination of domestic subsidised energy prices and a prioritising of export resources are contributing to a need to importLNG into a region of plenty.

Both oil and gas are traditional fuels for the purposes of power generation and it is natural gas which has been taking a leadingrole in this sector over recent years.


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Special Legal Focus


To some extent this may be a necessary response to an inability to commercialise or use associated natural gas otherwise, butit is also the case that natural gas is an environmentally cleaner fuel and with pressures in all jurisdictions towards the reductionof emissions and the management of carbon production, natural gas has been making a role for itself as a preferred fuel forpower generation.

This move towards increasing gas-fired power generation has been matched by a move towards more nuclear powergeneration, both in states with existing nuclear industries as well as new-comers. This progress may well now be re-assessedin the light of the accident at the Fukushima plant in Japan.

Whilst it is early days in the assessment of the accident, the reduction in nuclear capacity in Japan has led to increased localsupplies of LNG in the short term and a wider mood of questioning nuclear developments pending greater certainty overmatters of safety and sustainability in the longer term. While there is no questioning of the place of nuclear generation in theworlds energy supply over time, it does seem that developments are likely to slow in the nea r term with natural gas being themost likely (and generally abundant) replacement fuel.

Although the techniques and operations of the United States shale gas business and Australias coal seam gas business aremuch influenced by the local legal and political regimes in those jurisdictions, the developments which are taking place thereare likely to have application more broadly.

Already, other jurisdictions, particularly those in Europe, are looking to move towards shale gas production and similar movesare seen to hold great promise for the states of China and India, both of which have traditionally been import-dependent.

There are legal and regulatory as well as operational and technical challenges in these on-shore developments, but theseseem less onerous than those in off-shore environments where the challenges of deep-water exploration and production aregrowing.

The recent accidents at the Macondo field in the GOM and the Montara field offshore W. Australia have led to a re-evaluationby many states of the terms on which drilling (and particularly deep water drilling) should take place.

More broadly, there are also consequences for the granting of drilling permits, HSE requirements, operational practices and theavailability and terms of insurance cover.

These rapid and profound changes in the markets (and the supply and demand balance) of global natural gas are presentingnew challenges for international oil companies, national oil companies, governments and consumers around the world. Theyare also presenting considerable opportunities for the innovative and inventive raising of capital and finance on a rare scaleover the coming years.

About Paul Griffin:

Paul is based in London where he focuses on domestic and international M&A transactions and large scale commercial agreements for energy clients. Paul has also been involved in disputes and matters of public law in relation to the oil and gas sector. Paul was named Global Oil and Gas Lawyer of the Year 2010 (Who's Who legal awards). He was also awarded the Worlds leading Energy Lawyer 2010 (Expert Guides: Best of the Best 2010).

About Allen & Overy:

Allen & Overy's global Energy & Natural Resources team is at the forefront of this sector, providing clients advice on matters relating to power and utilities (including thermal and IWPPs, nuclear and renewables), transmission and distribution, carbon capture and storage, oil & gas (up, mid and downstream and LNG), mining & metals and climate change. Our clients are diverse, and include sovereign governments, corporates (utilities and sponsors, miners, oil & gas IOCs and NOCs, and independents), and financial institutions (banks, funds, ECAs/MLAs), suppliers and manufacturers. Their needs are also diverse, and we take immense pride in being able to deliver outstanding advice on transactions relating to M&A, project development, litigation, energy & emissions trading and funding (debt and equity). All of these transaction are supported by our market leading experts in areas such as taxation, antitrust, regulatory, environmental and employment, to name but a few.
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10/27www.oilcouncil.com/weca www.oilcouncil.com/awards [email protected]

Welcoming A New World Order:De ning the Roadmap for Future O&G

Finance and Investment

The de ning event for the global oil and gas, nanceand investment communities

CEOs and CFOs talk on the leadership challenges they now face in ensuringnew growth within over-regulated, increasingly competitive and volatile markets

Renowned market commentators discuss the dynamics of todaysmacroeconomic landscape

Energy banking legends explore the Dodd Frank Act, the future of commerciallending, the availability of nance and new sources of energy capital

A plethora of nancial advisors, institutional investors and PE investors exploreglobal M&A/A&D activity, deal ow and transaction metrics, capital raisingtrends, capex deployment and new investment strategies

Plus special focuses on exploration strategies; the future of the North Sea andNCS; emerging business opportunities in Africa; corporate governance bestpractice for E&P companies; the dynamics of todays global gas markets; andthe growing in uence of Asian NOC investment strategies

Keith RobertsCFO,Petrofac

Bill Transier Chairman, President and CEO,Endeavour International

Mike WattsDeputy CEO,Cairn Energy

Ian Springett CFO,Tullow Oil

Featuring some of the industrysmost in uential minds, including:

Abdul-Jaleel Al-KhalifaCEO,

Dragon Oil

Alan SteinCo-Founder and Managing Director,Ophir Energy

Lord John BrowneManaging Director Riverstone Holdings

Oil & Gas Company Executives Register Today for only 1,795!Special Industry Delegation Discounts Also Available!

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Senior Vice President, NorthernEurope,Total Exploration & Production

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Lead Partners:

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11/27

Special Legal Focus


What, From a Legal Perspective, Are The Two Main Legal IssuesChallenging Your Clients Today?

Stuart Carter, a Partner in Bond Pearces Oil & Gas team, talks Macondo and the Anti-Bribery Act.

The Post Macondo World

My job is to manage legal risk on behalf of our clients and to that extent my role is no different from any other commerciallawyer. However, in the oil and gas sector the stakes are often much higher than almost any other industry. Within thiscommercial environment, risk management has been brought into sharp focus by the fall out surrounding the Macondo wellblow out and the coming into force of the new UK Bribery Act. If you were to ask lawyers to identify the principal challengesfacing the offshore industry at the beginning of 2008 I would suggest that the overwhelming response would have beendecommissioning and financial security following the 'wobbles' after the banking collapse. Whilst that continues to constraindeal activity we are now facing different challenges affecting operational activity.

For the followers of Macondo the devil, as always, lies in the detailed definitions of 'gross negligence' and 'wilful misconduct',and the commercial terms that seek to allocate risk for pollution liability. Now more than ever before lawyers are pouring overthe minutia to see where their clients are exposed and what can be done to minimise risk. The stakes are high withcorresponding pressure put upon lawyers to 'guarantee' that client risk is kept to a minimum. Many would argue that it was ever

thus and so nothing appreciably has changed post-Macondo. I would disagree. The world has changed post Macondo, just as itchanged post Piper Alpha in 1988. We now live at a time where parties look for ever more water tight wording to limit anyexposure, no matter how remote. There is increasing concern in relation to third party claims that now seem to resembletelephone numbers and the spiralling cost of insurance premiums and larger deductibles. On top of this, the increased stirringsfrom the Regulator also need to be factored in. They all come together as a powerful concoction and the client can rightfullyexpect their lawyers to be at the ready with their pencils razor sharp.

The UK Bribery Act

But just like London buses, challenges to the settled commercial environment seldom arrive on their own. After more than ayear since it passed through Parliament - and after concluding a consultative process surrounding guidance, interpretation andimplementation - the Act will finally come into force on 1st July. All through this period we lawyers have been advising ourclients and the business community at large on the potential impact this new law will have upon the way business is conducted.Two areas have attracted particular attention. The first relates to the rules that govern the giving and receiving of corporatehospitality, gifts and entertainment. The second relates to installing and implementing procedures within organisations toprevent acts of bribery committed by staff. Some focus and discussion has also surrounded 'facilitation payments'. Whilst

clearly an important issue, such payments are illegal under existing laws and so the current debate in my view is a bit of a redherring, though we do have to point out the differences with the FCPA which allows such payments to be made.

The giving and receiving of corporate hospitality, gifts and entertainment has always been a feature of business life. The newBribery Act has not outlawed this practice but it does require a party to stop and reflect upon their intentions and motives beforeanything of value is given or received. In particular, is the intention to cement good business relations or is the dominantpurpose to influence the award or retention of business? It is in this context that clients often turn to us for guidance. As withany new statute upon the books, until a 'track record' has been established, including a few prosecutions, it is natural for mostlawyers to be cautious when offering advice on interpretation and application. But the overly cautious approach might notnecessarily be in their clients best interest. Competitors that have lawyers which are willing to provide more finely weightedadvice could steal a march on how they develop 'good business relations' with existing or potential customers. Getting thebalance right so as to ensure that the client falls on the right side of the line is something that lawyers are currently strugglingwith. It is not always black and white as the client's motives can be mixed and sorting out the good from the bad can be anexacting exercise for lawyers when seeking to advise clients what they can or should not do.

An area I find less of a minefield but no less important to clients is the role lawyers now have working alongside clients in

devising corporate procedures, the purpose of which is to prevent staff from committing a corrupt act in pursuit of companybusiness. It is widely known that under the new Bribery Act a company can face criminal prosecution if a member of its staff isfound guilty of giving or offering a bribe. A company's only defence against this charge is to convince the court thatnotwithstanding the breach, it does have in place 'adequate procedures' to prevent this type of activity. It currently remains achallenge to opine with absolute certainty as to what constitutes adequate for the purposes of the UK Bribery Act. In allprobability it will be several years before guidance based upon any real experience can be developed. Until that time lawyerswill continue to perform their risk based assessments without any fixed point of reference casting the net wide in the process.

The fallout from the Macondo well incident and the application of the new UK Bribery Act do present very real challenges tohow our clients pursue, or may have wished to pursue business opportunities not only on the UKCS but also internationally. Sowhen L.P Hartley wrote in the opening paragraph of his novel The Go-Between , "The past is a foreign country: they do thingsdifferently there." so it is with the oil and gas industry post-Macondo, post enactment of the Bribery Act. Things will be donedifferently from now on making the past a truly foreign land.

Stuart Carter is a partner in Bond Pearces oil and gas team with over 20 years petroleum industry experience. He has broad

UKCS and international exposure in the midstream and upstream spheres of the business with extensive experience of joint venture agreements, M&A activity work including farm outs/ins; development agreements and government contracts such as PSAs and Licence arrangements. He is also experienced in LNG project work and pipeline transportation.


12/27

Special Legal Focus


Oil & Gas Agreements: Negotiations with The StateWritten by Dr Ken Mildwaters, Founder and Managing Partner, Mildwaters Consulting

As a firm we spend a lot of our time assisting clients with preparing for and engaging in negotiations in respect of a wide varietyof oil and gas agreements: from the simple to the complex. This is far beyond what most lawyers engage in when theynegotiate an agreement on behalf of a client. We do that as well. We also assist our clients through the negotiation thataccompanies the implementation of the agreement.

In the main we counsel our clients along the lines of the mutual gains or integrative bargaining approach to negotiation:BATNAs (Best Alternative to a Negotiated Agreement), focus on interests, creating options, and the like. We also stress theimportance of preparation: and this is where we do a lot of our work with clients. What we find is that whilst the theory of whatwe advise is fairly widely known and understood, the implementation is generally less well executed.

One area that is of particular difficulty is applying this approach to negotiations with the State. In this context, by the State wemean the Minister, the head of department responsible of natural resources (in this case, oil and gas), officials and other agentsof the department, and the like.

The need to negotiate with the State arises many times during the lifecycle of a field: when seeking authorisation to explore,when granted an authorisation and determining the terms and conditions of that authorisation, when undertaking theexploration, appraisal, development, production and decommissioning operations. There appears to be no end to the number ofgovernmental consents required and in the vast majority of cases the granting of the consents, with or without conditions, isvested in the State; and almost invariably the decision of whether to grant the consents is at the sole, unfettered discretion ofthe State. A client with long and geographically diverse experience on the exploration side of the oil industry recently stated thatas much as 98% of petroleum operations require some form of governmental consent and the granting of such is left to thediscretion of the State the rest being prescribed by legislation, be it primary or secondary, where the consent is forthcoming ifcertain conditions have been satisfied. Take a few minutes to think about it.

The opportunity to negotiate

Where the State has such discretion there is also the opportunity to negotiate. These negotiations can be on such matters aswhether the discretion should be exercised so as to grant the necessary consent and, if so, whether the grant should or shouldnot be subject to conditions, and, if subject to conditions, what those conditions should be and what the sanction should be forbreach of the conditions.

We understand this, our clients understand this, and more importantly so does the State.

Preparation for negotiations

How do you prepare for such negotiations?

Firstly, you should identify your BATNA. Your BATNA establishes that point at which you should not reach agreement with yourcounterparty because the benefits of the agreement under negotiation do not exceed the benefits that your alternative offers.As a general rule, identifying your BATNA is not too difficult. In many cases, given how far you are into the lifecycle how muchtime, money and other resources you have invested to date (all of which contributes to entrapment and we can question towhat degree they should be taken into consideration) your BATNA may not be all that attractive.

Secondly, you should identify your interests and once identified you should not enter into an agreement that does not meetthem. Again, as a general rule, identifying your interests is not too difficult.

An example of a problem

Then we get to the actual negotiation itself and all too often a problem arises.

Let's look at a couple of examples. These examples are not unusual and nor is there any suggestion that the Statesrepresentative sought or received any sort of personal gain.

The first example arose when our client had made what it believed to be a commercial discovery. It was keen to develop thediscovery but to do so it required a number of governmental consents. It estimated that it was in the State's interest to haveproduction and, as such, we (our firm and our client) prepared for the negotiation on the basis of meeting the estimate of theStates interest. When we got to the negotiation table we quickly found out that the States interest was for more exploration. Italready had production but what it really wanted was more exploration: particularly in those areas perceived as having lowprospectivity. The State was looking for an agreement in which our client would carry out exploration activities in those areas inreturn for the necessary governmental consents which would contain certain favourable conditions. There was nothing in thelegislation that permitted this linkage. This link was being introduced by the State because of our client's need for consents toproceed. In the end, in order to secure the necessary governmental consents, our client agreed to fund a seismic survey overan area not included in its authorisation, subject to certain rights if the results proved interesting.

We recently had a similar experience in circumstances where no negotiation was anticipated.


13/27

Special Legal Focus


Our client was the operator and there had been a small spill during the course of operations. The spill was reported to therelevant department and shortly thereafter the Minister responsible for the department levied a fine on our client. Nothing in thelegislation gave the Minister power to levy a fine of any sort. As far as we and our client were concerned, this was a legalmatter: do not pay the fine, point out the error and the demand for payment of the fine would be withdrawn. A typical legalresponse.

Not so quick.

Our client had also applied for consent to carry out further petroleum operations in relation to the same explorationauthorisation. The granting of the consent was at the discretion of the Minister. The consent was not forthcoming. It was n otgranted nor was it refused, nothing appeared to be happening. Time was short and if the consent was not granted soon theweather window for carrying out the operations would pass.

Our client approached the Minister and asked when he would make a decision on the application for consent. "Whatapplication?" asked the Minister. He had not seen an application. Our client accepted this at face value and had another copyof the application delivered to the Minister.

Shortly after our client once again approached the Minister. Same question. Same response.

And again a third time.

What was going on?

We suggested an informal meeting with the Minister and our client. Shall we call it a chat and a drink after work.

He still had not seen the application and it became clear that he would not see it until our client had withdrawn its objectionto the fine and paid the f ine.

Given the closing weather window and the commitments our client had already made a classic case of entrapment itwithdraw the letter of objection and paid the fine to the State treasury.

The next day the application was granted without conditions. The Minister had subtly linked the payment of the fine with thegranting of consent, albeit in the case of the first he was acting beyond his power whilst in the case of the second he was actingwithin his power.

Why agree to a request by the State when the State has no legislative right to make the request?

In each case our client could have refused to agree to what the State had requested and, ultimately, if governmental consentwas not forthcoming it could have elevated the matter to arbitration or litigation or invoked third party (home government)pressure.

But it didnt. Why? In each case we looked at our clients interests. Where they being met?

In each case we looked at our clients BATNA. Was agreeing to this agreement better than our best alternative to a negotiatedagreement with the State?

In each case the answer to each question was yes.

The one area of concern was the added cost involved. Did it meet our clients interest to incur it? In each case, givenentrapment by how much time, money and other resources had been invested to date and, in the latter case, the closingweather window, our client was of the opinion that it was in its interest to incur the added cost. By incurring the cost it ended upwith an agreement that was better than its BATNA and met its interests. As one of the clients pointed out the alternative,given the governmental consents that would be required in the future, would have constituted an exit strategy.

The problem continues

In each case the agreement met our clients interest and was better than its BATNA until the next time it required government alconsent by then the entrapment was greater and the outcome was the same.

Now the problem is, how do you stop the downhill slide? The precedent has been set.

Again, that is where our firm comes in. Can we help our client to improve its BATNA and to find something that enables it todemonstrate to the State that such behaviour is not in the States interest, that the State's BATNA is not as good as it thinks itis, or that our clients BATNA is better than the State thinks it is but that is another story.

About Ken: Prior to establishing Mildwaters Consulting, Ken was a partner in leading law firms in the UK, Europe and Australia,GC at Guinness and Diageo and a partner in investment bank Babcock and Brown. In addition to operating a busy practice, he travels widely, running global workshops for governments, major companies and industry groups, and presenting papers on numerous aspects of natural resources law and business, in which he is an acknowledged international expert.
http://www.mildwatersconsulting.com/http://www.mildwatersconsulting.com/http://www.mildwatersconsulting.com/http://www.mildwatersconsulting.com/http://www.mildwatersconsulting.com/http://www.mildwatersconsulting.com/


14/27

TORYS CALGARY OFFICE

We are enhancing our service to Canadianand international clients that are investingor conducting business in Alberta or in theenergy sector overseas. Calgarys presence,together with our existing Toronto andNew York platforms strengthens our ability

to lead international transactions.

Toronto New York Calgary www.torys.com


15/27

Special Legal Focus


On the Spot with the GCs

What are the legal issues that are keeping you up at night in 2011?

Centrica is a FTSE 25 integrated energy company. My part of the business, Centrica Energy, has a broadportfolio of business covering upstream oil and gas, conventional, renewable and nuclear power generation alongwith a commodity trading business.

Each or our businesses is facing legal, regulatory and political challenges. Billions in power generationinvestment depend on the UK governments Electricity Market Reform proposals.

Our trading business will have to respond to wholesale reviews of EU and UK financial services regulation. Butthe UK governments surprise tax increase on gas p roduction creates particular challenges for Centrica Energy.

The governments recent change to supplementary corporation tax (SCT) is the UKs third tax hike on theupstream in last nine years. It increased the marginal tax rate on mature production in the UK sector to 81 percent one of the highest levels of the tax in the developed world.

Not only does the SCT change hit our bottom line, it also undermines Centricas UK upstream strategy by makinginvestment in one of our favoured areas materially less attractive.

From the policy perspective, the governments move is at odds with its objective of maximising North Seaproduction, investment and jobs. Is there any doubt that increased rates of tax will lead to reduced investment inthe declining UK sector?

Economics aside, producers and explorers will have to consider political risk. They will shift capital to countrieswith more stable tax regimes.

Over time the SCT change also spells bad news for gas consumers. Decreasing production in the UK meansincreased dependence on more expensive imported gas and higher bills.

If gas gets more expensive, more UK gas-fired electricity generation will be bumped out of the merit order bycheaper coal- fired power stations, undermining the UKs work to cut carbon em issions.

Centrica wants to be the leading consolidator and operator of mature and orphaned assets in the UK. Over thelast 3 years, Centrica has invested 3 billion in UK upstream growth.

We believed we would play a major part in ensuring that the North S eas significant remaining potential would berealised.

We will have to take a hard look at that vision.

- David Isenegger, General Counsel, Centrica

I have recently taken up the reins as general counsel of Valiant Petroleum, formed in 2004 as a full-cycleexploration and production company, and spent the first quarter re-immersing myself in the most recentdevelopments in English law (after five years in Asia) and focussing on the needs of a rapidly growingorganisation from a legal perspective.

The company is listed on the AIM market and seeks to deliver stakeholder value through commercialization ofsmaller development opportunities, near-field exploration and appraisal, overlooked exploration plays in matureareas and new exploration frontier areas with an initial focus on the UK continental shelf.

Its recently refinanced debt provides financial flexibility to continue to take advantage of opportunities in the NorthSea and elsewhere. Thus it is in a rapid phase of growth, which presents challenges on several fronts.

It is often said that a small company counsel faces a number of very different issues than those confrontinglawyers in the larger organisations in the sector.


16/27

Special Legal Focus


Balancing some of these, such as orderly corporate governance and proper planning and risk assessment, inareas such as company secretarial and insurance, to ensure they receive the proper time and attention whilstexperiencing tremendous pressure to undertake all the legal work (which has to be resisted), has been a learningexperience.

As a commercially trained lawyer, I enjoy filling the gaps in understanding, communication and general projectdirection amongst a highly technically focussed group of colleagues with a scarcity of commercial resources.

A major objective for this year is to ensure most efficient use of legal resources to meet budgets to ensure legalservices can keep pace with demand and takes a serious amount of investment of time to fit the right fit.Thankfully external legal services within the crowded sector are plentiful and these days more sensibly priced.

Coming out of a multinational corporation, I have had to rapidly adjust to at once recognise the remit of peoplesroles and temper the urge to be involved in every area to which I feel I can contribute - defining where the legalrole should begin and end in a fluid space is not as easy as perhaps imagined.

Ultimately, an ability to see the big picture and stay flexible enough to suit corporate objectives and some whimsof management, whilst resisting the urge to spend entire weeks in meetings, definitely pays dividends!

In terms of current changes in law and practice, the new supplementary tax in the UK, anti-bribery act and thedecommissioning security debate are all being extensively chewed over, with the most topical and potentially

most far reaching being the post Macondo assessment.

Regardless of the outcome, it is clear that liability is high on the agenda with regard to relationships between oiland gas companies in the future and it is too early to understand the complete nature of this change.

The heavy emphasis being placed on indemnity clauses within contract negotiations I have encountered recentlywith service companies suggests the relationship between services companies and operators is likely to be morecomplicated in the future.

Anticipating changes in regulations and what this will mean for all parties in making contracts, including the futurefor insurance and the risks therein, is work which is on-going within industry bodies, but which sadly time doesnot permit me to participate in as fully as I would like.

Several recent developments which have managements full attention and which have presented someunexpected challenges include:

The companys recent decision to acquire a Norwegian E&P company. Inevitably, this will involveadapting to ever greater demands on precious resources, developing in house local law expertise andexternal legal relationships, facilitating a process of integration and establishing a new culture of workingrelationships, while defining a level playing field for work allocation and marketing the legal departmentsservices amongst new colleagues.

The company is also undertaking its first operated project development in 2011. Understanding the rolesand responsibilities of each team member and in particular the need for the legal department toanticipate schedule risks, regulatory hurdles or key commercial roadblocks to ensure delivery of the keyregulatory approvals and adequate commercial agreements puts the lawyer to the forefront of theproject. Oversight of legal/commercial input to the contracting and tendering processes, and ultimatelycapturing lessons learned for the organisation has required significant day to day dedication.

With the company having reached a critical mass, we have also been focussed on the best approach forstandardising contract formats, data protection and document management issues and ensuring that corporatepolices and processes are fit for purpose.

I also want to develop a client education program with other business services, including a series of lunch andlearns for a growing workforce.

- David Bate, General Counsel, Valiant Petroleum
http://www.valiant-petroleum.com/http://www.valiant-petroleum.com/http://www.valiant-petroleum.com/http://www.valiant-petroleum.com/


17/27

www.herbertsmith.com

Stephen MurrayGlobal head of oil and gas+44 20 7466 [email protected]

Simon TysoePartner+44 20 7466 [email protected]

For more information please contact:

Leading the way foroil and gas

Herbert Smith LLP is a leadinginternational law firm with anoutstanding reputation withinthe oil and gas sector.

Our global network of energy specialists, coveringall legal disciplines, advise the oil and gas industryon deals, projects and disputes across Africa, Asia,

Australasia, Africa, Europe, the Indian Subcontinent,the Middle East and Russia and the CIS.


18/27

Special Announcement


*** News Release Launch of The Oil Councils Legal Committee ***

The Oil Council is pleased to announce the launch of its Legal Committee. As part of our dedication tostrengthening our international network we are creating a Legal Committee within The Oil Council.

The Committee is a distinguished selection of legal experts working across the oil and gas industry (GeneralCounsels and Partners from across the E&P, OFS, advisory and banking worlds).

We will work with these experts to extract topical issues and insightful content to be discussed and shared acrossour wider network, whilst ensuring private and senior networking between the experts and other legal entities.

Purpose: High-end thought-leadership and networking for legally minded professionals

Level: GC and Partner only (admission to this committee is by invitation only)

*** Founding M embers include ***

Greg Hammond,Partner,

Akin Gump StraussHauer & Feld(Chairman)

Danielle Beggs,Partner,

SNR Denton

David Lewis,Partner,

Clifford Chance

Tony Peart,Legal & Commercial

Director,Gulf Keystone

Petroleum

Shirin Johri,Group General

Counsel, Afren

Sandy Shaw,Director and Group

General Counsel,Valiant Petroleum

For more information and to become involved please contact: [email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]


19/27

SNR Denton is a client- ocused internationallegal practice delivering quality and value.

We serve clients in key business and fnancial centers rom60 locations and 43 countries, through o fces, associate

frms and special alliances across the US, UK, Europe, theMiddle East, Russia and the CIS, South-East Asia, and A rica,making us a top 25 legal services provider by lawyers andpro essionals worldwide.

Our energy team comprises more than 100 lawyers coveringall types o energy related work, ranking it among the largestdedicated energy legal practices in the world. The team has

extensive experience advising energy businesses on all typeso oil & gas projects and acilities.

Areas o Focus: Upstream and downstream Pipeline transportation and storage LNG Petrochemicals Oil and gas trading Derivatives Regulation Privatization of oil and gas industries and enterprises

Contact

Danielle Beggs

Partner, LondonT + 44 (0)20 7246 [email protected]

Vince Murchison

Partner, DallasD +1 214 259 [email protected]

S e e

A l l S i d e s

I n t r o

d u c i n

g S N R

D e n t o

n


20/27

Special Legal Focus


The Legal Corner "What legal steps must companies take to reduce operational risk?"

In the Middle East, operational risk continues to include a strong element of managingpolitical risk. Oil companies negotiating new agreements should be paying particular attention toclauses which can help mitigate their risks in circumstances of government delay, changes in law,political force majeure, employment disputes and sabotage.

They should also be firm in negotiating rights to receive compensation in cases of unilateralgovernment termination and of any material adverse change occurring to their commercial position.

Down the supply chain, it remains important for operational risks to be passed to contractors,service companies and other suppliers through well-crafted sub-contracts.

The In-house lawyer should be playing a central role on the risk committee. There remain strongopportunities across the region for those companies who are prepared to take risks and who aresavvy enough to manage them carefully.

- Charles Wilson, Partner, Trowers & Hamlins

In the aftermath of Macondo, many upstream oil and gas companies have been reviewing thecontracts governing their operations to assess their exposure to any incident of similar proportions.

As the recommendations in BPs Deepwater Horizon Accident Investigation Report illustrates, theexercise of appropriate oversight and control of operations is a key factor in reducing operationalrisks.

In this regard, a non-operator may find itself in an uncomfortable position. Joint operatingagreements will provide that non-operators have a vote in relation to certain material decisions andimpose an obligation on the operator to provide information relating to joint operations to the otherpartners.

However, in practice the value of these provisions may be limited. A non-operator may not have asufficient participating interest to enable it to block a vote on a matter that does not requireunanimity whilst the obligation to provide information may be observed in the breach as often as not.

In such circumstances, whilst a non-operator will typically (in the absence of gross negligence orwilful misconduct by the operator) bear its proportionate share of any liabilities arising from anincident it will not have rights to oversight and control commensurate with such potential exposure.

Accordingly, a significant first step for all companies to take in any risk assessment is to review theirrights to oversight and control and the extent to which those rights are being observed.

Balanced against effective non-operator oversight is the need for the operator to have anappropriate degree of discretion and f lexibility in the conduct of operations, especially in emergencysituations.

It is important that such flexibility is not negated by restrictions in any financing document (i.e. the

financing documents should not contain a covenant which restricts expenditure being incurred inexcess of an approved budget or if there is such a covenant it has suitable carve out for expenditureincurred in relation to dealing with emergencies).

- Alan Rae Smith, Partner, Freshfields Bruckhaus Deringer

Macondo has meant companies must take a root-and-branch approach to reducing operational riskand take renewed accountability for operations, whether they are operators or non-operators.

For operators, ensuring that best practice is used on operations by contractors is important, and soensuring not only that contractual obligations are in place to address this but also that processes formonitoring this during operations need to be in place.

For non-operators, vetting operators, ensuring that they use best practice and reviewing what theyare doing is paramount - non-operators cannot afford to simply leave it to operators any more thanoperators can leave it to contractors.

Contracting strategy needs to address this too - best practice needs to flow down and mechanisms


21/27

Special Legal Focus


need to be put in place to make sure it does, not only so that the contracting strategy minimises riskfor the joint venture but also to that other risks, such as Bribery Act exposure, are adequatelyaddressed.

Of course, risks can only be minimised so far. Things will happen and so crisis management andliability issues need to be understood and addressed.

Not every company can respond to a crisis and deploy resources in the manner of a super-major,but each company needs to know how they will respond and deploy their resources in the event ofan emergency.

Playing a part in and leverage off of the industry wide response initiatives, such as OSPRAG'scapping device, can help.

Companies need to be aware of the financial liabilities that an event might place on them, eitherdirectly as operator or through cash-calls and ensure they can meet this, if necessary throughrecourse to insurance.

Overall, companies need to ensure that they are joined up across their functions in respect of riskmanagement no small task even for the smaller players.

- Simon Tysoe, Partner, Herbert Smith

There are a number of things Oil & Gas companies operating in Argentina need to focus on in orderto reduce operational risk:

Insurance : Buy adequate coverage, including the recently available environmental coverage,is advisable. We are seeing a rise in controversies in this area, and this newly created type ofinsurance could prove useful.

Environmental : Have in place a policy to constantly and strictly ensure compliance with localand national rules. Remediation can be onerous and cumbersome, and take a long time tocomplete.

Health and safety : Carry out a strict control of the performance (of the very company andthose of contractors and subcontractors) of all regulations related to health and safetyrequirements at work.

Landowners : Obtain, before starting activities in any given area, all possible information todetermine the existence of private landowners and local communities that may be affected bythe operations. Reasonable and sustainable agreements should be entered into with theselandlords.

Royalties : Have duly trained staff prepare calculation and payment of royalties and canon(land use rights), and have experienced outside counsel control and audit these calculationsand payment. This helps avoid unexpected and sometimes exorbitant claims from the taxcollectors. Regulations on royalties are complex in Argentina, and can sometimes seemcontradictory or subject to various interpretations.

Contractors and subcontractors : Have a constant control policy (including review of relevantdocuments and proof of payments) of labour-related information from contractors andsubcontractors. It is common practice in Argentina to have a substantial part of the employeesrequired for the operations hired through contractors and subcontractors.

Argentine labour regulations establish joint and several responsibilities for companies usingthese contractors for most aspects, including the payment of salaries, payroll taxes, socialsecurity charges and contributions.

Regulatory : Have a strong policy to comply with all relevant registration requirements, andmaintain them over time. This will help avoid fines and sanctions that can obstruct or suspendactivities. Local and federal registries sometimes overlap, even when this may beunconstitutional.

Having counsel prepare a quarterly report on regulatory developments for the oil & gas industry issomething companies appreciate as a means of keeping abreast of what the current requirementsare and avoiding pitfalls.

- Pablo De Rosso, Partner, Martelli Abogados, Argentina


22/27

Addleshaw Goddard is a leading legal adviser to the UKs FTSE 100 that provides strategic advice to oil andgas companies on debt and project fnancings, dispute resolution, mergers and acquisitions, stock market

undraisings and IPOs. Through a commitment to delivering the best advice every time, our clients beneft rom

the extraordinary e ort that we invest in our relationships.

To fnd out more about how we can deliver di erently or your business, contact:Andrew Petry on +44 20 7160 3520 or Simon Gri fths on +44 20 7880 5666

www.addleshawgoddard.com

Finding the rightsolution or yourbusiness


23/27

Online Columnists This Month Include...


LISTEN TO THE OIL COUNCILS JUNE PODCAST IN CONJUNCTION WITH PLATTS. THIS MONTH

John Kingston , Director of News at Platts speaks with Mark Harrington , Chairman and CEO of Best Energy

Listen to this podcast now here

Considering the current and ever growing regulatory jungle of environmental,municipal, and international laws, its amazing that any projects getaccomplished. The ability to provide sustainable, reasonably priced energy isbecoming more and more challenging. Smaller producers are strapped withmeeting the same regulatory and compliance issues as the major players, and

the costs can be staggering. But there is some light at the end of the tunnel Read the rest of Kevins columns here...

The recent OPEC meeting revealed an organization not seen in almost 20 years,

reminiscent of a pre- financial crisis OPEC or an OPEC of the 1990s, one thatcould not close its ranks. We just witnessed a chink in the armour so to speak. Read the rest of Giannas column here...

With an estimated 6,622Tcf worldwide, a quick glance at the table of suchresources in Europe shows that shale gas is most abundant in France andPoland, with the two countries carrying comparable technically recoverableresources of 180Tcf and 187Tcf respectively. But all similarities end there, witheach country responding to this in completely different ways. Read the rest of Elaines column here...
http://www.platts.com/IM.Platts.Content/insightanalysis/podcasts/oilmatters/archive/2011/june/oilmatters061011.mp3http://www.platts.com/IM.Platts.Content/insightanalysis/podcasts/oilmatters/archive/2011/june/oilmatters061011.mp3http://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=elainehttp://www.edisoninvestmentresearch.co.uk/http://www.brookshireadvisoryandresearch.com/http://www.kerrtrade.com/http://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.edisoninvestmentresearch.co.uk/http://www.brookshireadvisoryandresearch.com/http://www.kerrtrade.com/http://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.edisoninvestmentresearch.co.uk/http://www.brookshireadvisoryandresearch.com/http://www.kerrtrade.com/http://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.edisoninvestmentresearch.co.uk/http://www.brookshireadvisoryandresearch.com/http://www.kerrtrade.com/http://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.edisoninvestmentresearch.co.uk/http://www.brookshireadvisoryandresearch.com/http://www.kerrtrade.com/http://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.edisoninvestmentresearch.co.uk/http://www.brookshireadvisoryandresearch.com/http://www.kerrtrade.com/http://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.edisoninvestmentresearch.co.uk/http://www.brookshireadvisoryandresearch.com/http://www.kerrtrade.com/http://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.edisoninvestmentresearch.co.uk/http://www.brookshireadvisoryandresearch.com/http://www.kerrtrade.com/http://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.edisoninvestmentresearch.co.uk/http://www.brookshireadvisoryandresearch.com/http://www.kerrtrade.com/http://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.platts.com/IM.Platts.Content/insightanalysis/podcasts/oilmatters/archive/2011/june/oilmatters061011.mp3http://www.edisoninvestmentresearch.co.uk/http://www.brookshireadvisoryandresearch.com/http://www.kerrtrade.com/http://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.edisoninvestmentresearch.co.uk/http://www.brookshireadvisoryandresearch.com/http://www.kerrtrade.com/http://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.edisoninvestmentresearch.co.uk/http://www.brookshireadvisoryandresearch.com/http://www.kerrtrade.com/http://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.edisoninvestmentresearch.co.uk/http://www.brookshireadvisoryandresearch.com/http://www.kerrtrade.com/http://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerrhttp://www.edisoninvestmentresearch.co.uk/http://www.brookshireadvisoryandresearch.com/http://www.kerrtrade.com/http://www.oilcouncil.com/index.php?page=elainehttp://www.oilcouncil.com/index.php?page=giannabernhttp://www.oilcouncil.com/index.php?page=kevinkerr


24/27

C l i f f or d

C h

a n

c e L L P

Quality reserves of legal experienceClifford Chance brings international insight, local expertise and a long-term commitment to key oil and gasmarkets the world over.

Whether you are contemplating an upstream investment in Asia, a downstream project in the Middle East orsimply need help navigating your way through the complexity or diversity of handling a deal or dispute in

Africa or Europe - we have the team and experience to assist you. Our expertise in M&A, finance, disputeresolution and environmental regulation is widely acknowledged in the oil and gas industry and this isreflected in our current Tier-1 ranking as an oil and gas firm by global legal directories.

Visit www.cliffordchance.com/oilandgas to discover more about Clifford Chances oil and gas expertise.

We have a global commitment to diversity, dignity and inclusiveness.
http://uk.sitestat.com/cliffordchance/cliffordchance/s?Oil_Councils_May_e-magazine_edition&ns_type=clickinhttp://uk.sitestat.com/cliffordchance/cliffordchance/s?Oil_Councils_May_e-magazine_edition&ns_type=clickin


25/27

Are you an Oil Council Member? If not apply now:

http://www.oilcouncil.com/index.php?page=becomeamember

Meet The Members

Member Member

NicolaDennes

PrincipalConsultant,Cripps Sears

Dougie Youngson,

Director,Oil & Gas, ArbuthnotSecurities

How did you come to be in the oil industry? How did you come to be in the oil industry?

Id like to say it was strategic decision but, havingstudied Computers & Business studies, I wasdeemed an ideal candidate to recruit professionalsinto BG/Transco.

This led me into financial recruitment in the City,followed by three years working in Sydney, beforecoming back to London. I joined Cripps Sears &Partners in 2006 and co-lead the Oil & GasProfessional Services Practice. I focus on corporatesupport for Oil & Gas companies, and relatedprofessions i.e. energy focused lawyers, accountants,and advisors to the sector .

It was a slight accident. Originally, I was in ADL'sChemical team, but they needed someone to gowork in Kuwait, so off I went. Never looked back.

What is your proudest work-related achievementto date?

What is your proudest work-related achievementto date?

Success and, ultimately, achievement in my businessis about working with clients who value our approachas a trusted advisor, identifying the right person andpresenting them with the right opportunity whichallows both them and company to grow. I haverecently moved people from Aberdeen to Geneva,London to Dubai, London to Aberdeen. I love the factI can really make a difference to how peoplemaximise their careers and actually live their lives.

Taking an unknown, illiquid AIM stock from 10p to400p and turning it into a market darling (for awhile). Raised them a lot of money on the way sothat they could do some very successful drilling.

Where do you see the greatest challenge intodays oil and gas markets?

Where do you see the greatest opportunity intodays oil and gas markets?

The much publicized technical skills shortageremains prevalent, particularly within subsurfacetechnical disciplines at the 10-20 year experiencelevel. Combined with a large number of individualsapproaching retirement (and a shortage of skilledindividuals to replace them), this is leading to more

junior people being relied upon to fill the gaps whereoften the technical, and particularly leadership skills(people skills) are not as developed, and need furthertraining.

One solution to stop this loss of experience is to bringskilled individuals back as advisors as QA/QCs.

Revisiting mature and abandoned fields. Enhancedoil recovery in a high oil price environment willbecome a growing market as exploration andgeopolitics get harder. The North Sea for examplestill has a lot to offer, not just in terms of EOR butalso looking at the heavy oil reserves which haveyet to be tapped in a significant way.

Where do you see the greatest challenge?

Companies getting their strategies right. I still find itamazing how few companies have one or can stickto one. It is the key for getting things done.


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Are you an Oil Council Member? If not apply now:

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Meet The Members

What was the wisest advice you ever receivedfrom a mentor?

What was the wisest advice you ever receivedfrom a mentor?

A thought that I am particularly fond of is: I wonder what will happen in my life today. I have also beentold: You can do anything, but you cant doeverything; I still believe that I can do both though

Size matters not. Look at me. Judge me by size, doyou?

What advice would you pass on to a graduatewishing to work in your line of business?

What advice would you pass on to a graduatewishing to work in your line of business?

You have to be passionate about what you do everysingle day. You meet some amazing people; it is hardwork, relatively long hours, you have to be veryflexible (especially in relation to travel) and you cannever turn your Blackberry off.

Build up your network of contacts from day one. Youcan never know enough people and you never knowwhen you might need them.

Whats the one interesting fact about you that noone would suspect?

Whats the one interesting fact about you thatno one would suspect?

I have had a personal guided tour of The Pentagon. One of my knees is artificial, guess which one.

How do you prefer to spend your spare time? How do you prefer to spend your spare time?

There is no spare time; time not spent working istraining or socialising time. This often involvesencouraging my friends to sign up for, and then trainfor, interesting sporting events. (I confess alcohol hasbeen used in some cases). My passion is triathlon,ideally outside the UK. I am currently on countdowntraining to my first of two Ironman triathlons this year,one in Germany and the other in Arizona. (2.4mile/3.86km swim, 112mile/180km cycle, and amarathon 26.2miles/42km run)

With friends.

Favorite holiday destination? Favourite holiday destination?

A holiday for me, in the main, is about travelling andreally getting to know a country. Ideally, this would beeither in the USA, as they do a mean taco andbreakfast burrito, or SE Asia, as all the food there isfabulous. I do occasionally sit on a beach, for aboutan hour.

Not really a holiday destination, but I feel more athome in Amsterdam than anywhere else. I do loveSE Asia though and love travelling there.

All-time favourite book? All-time favourite book?

London by Edward Rutherford a fast movinghistorical novel spanning sixteen centuries of London,my favourite city.

I don't really have one as I read so much. Goingthrough a Swedish crime novel phase at the minuteso probably one of the Wallander series.

All-time favourite film? All-time favourite film?

Apocalypse Now Redux. Not Star Wars despite my answer above. ProbablyGroundhog Day, I could watch it over and overagain.

What 3 things would you take to a desert island? What 3 things would you take to a desert island?

My two year old Vizsla dog, who I concede has evenmore energy than me; my on-going subscription toNational Geographic; finally, I am torn between myGarmin 310XT and a fully stocked bar with valet.

Sadly though, with current training pressures, I thinkthe Garmin will have to win - just this once.

A parang, flint fire lighter and Ray Mears (and if nothim, one of his books).


27/27

Welcoming A New World Order:De ning the Roadmap for Future

O&G Finance and Investment

The de ning event for the Americas oil and gas, nanceand investment communities

CEOs and CFOs talk on the leadership challenges they now face in ensuringnew growth within over-regulated, increasingly competitive and volatile markets

Renowned market commentators discuss the dynamics of todaysmacroeconomic landscape

Energy banking legends explore the Dodd Frank Act, the future of commerciallending, the availability of nance and new sources of energy capital

A plethora of nancial advisors, institutional investors and PE investors explore NAand global M&A/A&D activity, deal ow and transaction metrics, capital raisingtrends, capex deployment and new investment strategies

Plus special focuses on the US Shale Gale; the pressures facing regional anddomestic NGL markets; the future of Canadas oilsands; new regulation andmoratoria; the continuing rise of LatAm as an energy power; and the growingin uence of Asian NOC investment strategies

Jose Francisco ArataPresident,Paci c Rubiales

Ed CohenChairman and CEO,Atlas Energy

John MoonManaging Director,Morgan Stanley Private Equity

Adrian GoodismanManaging Director andCo-Head U.S,Scotia Waterous

Featuring some of the industrysmost in uential minds, including:

Frank HolmesCEO and CIO

US Global Investors

Peter TertzakianChief Energy Economist,Managing Director,ARC Financial and bestselling author

John Bookout Managing Director,KKR

Oil & Gas Company Executives Register Today for only $1 495!Special Industry Delegation Discounts Also Available!

Tony Weber

Managing Director and ChiefInvestment Coordinator,Natural Gas Partners

Edward MorseGlobal Head, Commodity ResearchCiti Global Markets

October 5 6, 2011Hyatt Midtown,

New York City, USA

ENERGY CAPITAL ASSEMBLY AMERICAS

Oil Council

Lead Partners:

Partners:

Toronto StockExchange

TSX VentureExchange

drillers and dealers june 2011

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