Oil and gas leases are critical to companies in the extraction sector. There are many strategies to acquire the mineral rights necessary to drill on private property. Typically, successful oil and gas companies negotiate lease arrangements directly with property owners or outside parties that own the rights. However, it is also possible in many cases to acquire an existing lease from another business.
Potentially lucrative opportunities may arise in scenarios where other oil and gas businesses are at risk of failing or already going out of business. In such cases, businesses hoping to expand their portfolios may need support in ensuring they follow the right procedures when acquiring existing leases.
Acquisitions may occur during bankruptcy
Frequently, those closing or restructuring a business pursue bankruptcy as part of that process. The goal is to limit future financial liability whenever possible. In a Chapter 7 bankruptcy or a Chapter 11 restructuring, another company may liquidate certain resources to address financial obligations. During that process, outside parties can potentially acquire assets.
While bankruptcy trustees generally try to secure a reasonable fair market value for oil and gas leases, the process can still be beneficial for other companies hoping to acquire existing leases. Compliance with bankruptcy rules and support when negotiating the terms of an oil and gas lease purchase as part of another organization’s bankruptcy are both important for the protection of acquiring companies.
Especially when using alternative means to secure new oil and gas leases, business leaders may require assistance to ensure they comply with all applicable laws. Working with an attorney familiar with the unique challenges faced by oil and gas well operators can make it easier to avoid common pitfalls associated with bankruptcy-related lease acquisition.