Practice Strengths

Oil & Gas: Structuring a tender offer/merger in our client’s best interests

Client: Prima Energy Corp., a Denver-based natural gas company traded on the NASDAQ

Type of Matter: Tender offer and merger

Our Client's Challenge: Prima Energy accepted a $39.50 per share tender offer from Petro-Canada, but wanted to provide its shareholders with maximum value.

The Goal: After working with Prima Energy since the company went public in 1980 and guiding it through more than 20 years of growth, we counseled the company on the sale process.

Our Strategy: When our client decided to accept Petro-Canada’s bid, we facilitated the transaction by assembling a transaction team from six of our 11 offices, who focused on the M&A, securities, corporate, antitrust, tax, employee benefits and environmental law issues. We helped structure the deal as a tender offer followed by a merger that made Prima Energy a wholly owned subsidiary of Petro-Canada.

Results: After two weeks of round-the-clock work to negotiate the Agreement and Plan of Merger, we handled the necessary SEC filings and were able to quickly complete the $534 million sale. The result was a significant strategic victory for both companies.

Oil and Gas
Baker Hostetler speaks the language and understands the business of the energy industry. Lawyers on our team have technical degrees and have worked in-house with major energy and oilfield service companies. We have the insight to advise international and domestic energy companies on exploration, distribution and sale matters, as well as regulatory issues, finance and transactional matters, antitrust questions and trade and customs concerns.

On the business side, our lawyers handle stock and asset acquisitions and dispositions of energy companies and their assets, including acquisitions and dispositions of proved and unproved oil and gas properties, natural gas gathering systems, drilling rigs and related equipment.  Our lawyers also handle both simple and complex contract matters of all types.  We have represented issuers and underwriting syndicates in public offerings of oil and gas company debt and equity securities, and managed private placement of energy company debt and equity securities with commercial banks, insurance companies and other institutional investors.

We represent numerous major energy and oilfield service companies in a wide variety of litigation arising from contractual disputes involving oil and gas leases, joint operating agreements, joint development agreements, exploration and development agreements, drilling contracts, licensing agreements, patent infringement, offshore environmental compliance and oil spill issues. Our work has included lease disputes involving over $1 billion in claims, and defense of an antitrust lawsuit over a shipper's access to a pipeline in which we obtained summary judgment dismissing claims of more than $160 million in damages.

We also have represented major oil companies in litigation involving an explosion of a salt dome storage facility, construction disputes involving major facilities, personal injuries at production and refining facilities, disputes over rights to seismic prospects, disputes over royalty interests, disputes over purchase and sale of mineral interests and environmental audits of coke handling facilities.

Our representation includes several pipeline companies, including the pipeline operating company of a major oil company for several years, covering all aspects of pipeline operations, including condemnations, Interstate Commerce Act regulations, Texas Railroad Commission regulations, easement and right-of-way disputes, product liability claims against manufacturers of pipeline and valve components, disputes over alleged contamination of common stream shipments, damage to common stream shipments by shippers of off spec crude and products, personal injuries to workers and bystanders, toxic tort claims, claims of ground and water contamination from pipeline leaks, disputes with contractors over construction of pipeline facilities and essentially all disputes that a pipeline operator encounters.

Representative Oil and Gas Experience

• Ranked among the top 10 U.S. law firms for merger and acquisition deals in the oil, gas and oilfield service industries by The Deal magazine.
• Represented an industry leader in a $4.5 billion transaction that created one of the nation's largest crude oil-focused independent North American exploration and production companies.
• Represented one of the world's largest energy companies in a variety of transactions, including a $200 million joint venture with a common carrier pipeline company, the $500 million sale of a refinery and the $30 million acquisition of major terminal and pipeline assets.
• Represented a fully integrated energy company in a dispute with the owner of numerous service stations. The owner alleged that the energy company had promised to give him certain concessions on the price he was paying for gasoline. The owner claimed damages for fraud and breach of contract in excess of $30 million. The jury found in favor of the energy company on all issues.
• Represented the world's largest integrated energy company in federal litigation involving a dispute over development rights and ownership of oil and gas reserves off-shore California, establishing such a strong case that the client was able to acquire the rights at minimal cost in a pretrial settlement.
• Worked with a hedge fund to purchase $700 million of oil and gas properties in two complex transactions involving a volumetric production payment that gives the financing bank an interest in the energy reserves.
• Represented the pipeline division of large energy company in the formation of $200 million joint venture with the largest pipeline company in the U.S. for the construction and ownership of a 78-mile products pipeline in the State of Louisiana, for shipment of 400,000 barrels/day of refined petroleum products.
• Represented the pipeline division of large energy company for the negotiation of $800 million long-term shipping agreements with large refining companies.
• Represented the pipeline division of large energy company for the purchase of $5 million of intrastate pipelines and product station assets in State of Texas.
• Represented the refining division of large energy company for the purchase of $35 million of terminal assets in State of Texas.
• Served as lead counsel for a consortium of the 14 largest refining companies in the United States relating to a joint venture project to streamline the industry's business operations.
• Represented a publicly held drilling company in its $3 billion merger with another publicly held drilling company.
• Handled numerous sales to major energy companies of developed, producing oil and gas properties in South Texas on behalf of a Texas-based independent oil and gas exploration company and its affiliates.
• Represented a Texas-based independent oil and gas exploration company in all types of transactions and litigation matters.
• Representing one of nation's largest private energy companies with its international transactions and joint ventures involving compressed natural gas products and equipment in various global markets, including South America and Europe.
• Represented a large oilfield and refinery equipment construction company in a dispute involving the sale of new technology developed by a subcontractor. The subcontractor claimed it was not bound by the prime contract with the customer. We were able to obtain a favorable ruling in federal and state courts for the client.
• Represented a large drilling company in a patent infringement lawsuit that resulted in acknowledgment of the validity of the subject patents and the payment of royalties.
• Defended a fully integrated energy company in a lawsuit involving claims of oil and gas lease termination and bad faith trespass. The plaintiffs sought $2 billion in damages. We secured a take-nothing judgment for the client.
• Represented exploration and production companies and numerous oilfield services companies in cases involving downhole failures, resulting in successful outcomes.
• Provided representation to one of the largest drilling contractors in the United States in a dispute concerning the drilling of a deep over-pressured well on the Gulf Coast. The lawsuit resulted in the client obtaining a favorable judgment.

Utica and Marcellus Shale Plays

The economies of geographic areas within Ohio and Pennsylvania are poised to undergo radical transformation with the discovery of large quantities of oil and natural gas in geologic formations known as the Utica and Marcellus Shale plays. With the use of horizontal hydraulic fracturing to extract oil and natural gas from the shale plays, interests within these states and energy industry entities from around the country are positioned to capitalize on the many opportunities this dramatic production of oil and natural gas affords.

Baker Hostetler has a rich tradition serving clients in the energy industry, offering comprehensive services from our offices coast to coast. Several of our attorneys represent clients active in all of the major shale plays throughout the United States. The firm has a multi-disciplinary and multi-office team to serve clients specific to the Utica and Marcellus Shale plays, representing the interests of industry partners, smaller producers and lease owners in this high-stakes marketplace.

Maritime and Off-Shore Energy Issues
We have represented oil, gas and energy companies in a variety of off-shore and maritime issues.  They have included:  collisions of tankers, oil spills onto navigable waters, Jones Act and other personal injury and death claims by maritime workers, injuries to maritime workers employed in navigable waters off or near Kazakhstan, Nigeria, Russia, Mexico and the U.S. Gulf and West Coasts and charter party disputes over ships and barges.  In addition, we have dealt with claims of damage to a barge from precipitation of asphaltines during transit, claims of damage to ships from explosive nature of cargoes of oil products, damage to dock facilities from tankers striking same, limitation of liability proceedings, general average declarations, arrest and foreclosure of maritime liens against ships, product liability claims and disputes over vessel financing.

International
With our extensive international practice, we also aid upstream and downstream producers and operators with international commercial and regulatory matters. This includes international arbitration, litigation and regulatory penalty resolution.

Representative International Experience

• Advising offshore drillers on the application of the U.S. coastal trade laws and international law of sea issues dealing with the Outer Continental Shelf and the Exclusive Economic Zone.
• Assist super-major and major oil companies with all aspects of the purchase, development and import of deepwater rigs such as spars, TLPs and others since 1991. Export controls and related issues involving personnel working on these rigs in the U.S. and technology derived from operating these rigs under U.S. export controls has been part of some of those projects as well.
• Multiple commercial contracts for import, export and services relating to petroleum equipment for service companies, producers and banks.
• Many significant international arbitration and litigation experiences involving seismic services, multi-party, multi-national interests involving U.S. and foreign producing properties and upstream and downstream facilities and technology. This included application of U.S. and foreign international trade regulation such as export controls and anti-boycott laws as well as the Foreign Corrupt Practices Act, the Patriot Act and other laws affecting global energy companies in setting up or restructuring global operations.

Environmental
From simple product liability and toxic tort suits to mass torts involving thousands of claimants, Baker Hostetler has defended energy and petrochemical companies in environmental litigation. We also have defended petrochemical and energy clients from toxic tort claims involving exposure to dozens of substances.

Representative Environmental Experience

• Represent integrated oil companies and petroleum production operations in litigation involving major offshore oil spills during production and transportation of hydrocarbons by sea.
• Defended claims concerning alleged contamination of groundwater, soil and air arising from oil and gas pipeline leaks, valve failures and oil production operations.
• Defended claims by commercial entities and homeowners arising from petroleum and aviation fuel leaking from petroleum storage tanks into waterways.
• Defended Jones Act and Oil Pollution Act of 1990 claims against oil industry maritime vessel and pipeline operations involving navigable waterways.
• Represented the time charterer involved in a tanker spill of 400,000 gallons of crude oil off the California coast. Representation included all aspects of litigation, including the state's natural resources damage claim and resulting class action claims.