With U.S. crude almost doubling in price since February and natural gas gaining about 38 percent just since May 26, stakeholders in at least three bankrupt energy companies are contending that corporate assets have risen so much in value that they deserve a bigger payout, reports Bloomberg News.

The news service, citing a letter by its reporter, says that “Sabine Oil & Gas Corp.’s unsecured creditors and note holders of Forest Oil Co., which merged with Sabine in 2014, filed a report last week seeking a jump in recoveries. Shareholders of bankrupt driller Penn Virginia Corp. questioned current valuations, while Ultra Petroleum Corp. shareholders, who are the first to be wiped out in a bankruptcy, said earlier this month that they are “very likely ‘in the money.’”

Sabine creditors creditors are claiming the company is ignoring the recent increase in oil and gas prices to inflate the amount paid to the secured lenders at the expense of junior ones.

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An article written by Raymond Patella and Michael Viscount of Fox Rothschild LLP outlines a handful of popular credit enhancements oil and gas companies may use to minimize their risk or exposure to a counterparty that they believe may be having financial difficulties.

“There are many different types of credit enhancements depending on the parties’ leverages, cash flow, size and risk. All of these factors should be considered to arrive at an enhancement best tailored to address the concerns of specific circumstances,” they explain.

The cover such topics as tighter payment terms, consignment, security interest, security deposit, credit insurance, guaranties, and setoff.

Read the article.

Kirkland & Ellis LLP announced that it advised TSSP, a leading special situations investment platform of TPG, on its agreement with Hunt Oil Co., a privately held oil and gas exploration and production company, to develop certain of Hunt Oil’s assets in the Midland Basin in Texas.

The development area covers approximately 18,000 net acres across Martin, Glasscock, Midland and Upton counties. Under the agreement, TSSP has committed up to $400 million to fund the development which is expected to take approximately three years to deploy.  Additional terms were not disclosed.

The Kirkland team was led by corporate partners Anthony Speier and David Castro and associates Christopher Heasley, Nick Wenker, Ryan Martin and Lindsey Jaquillard; debt finance partners William Bos and Lucas Spivey; tax partner Chad McCormick and associate Joe Tobias; environmental transactions partner Paul Tanaka and associate Stefanie Gitler; restructuring partner Ryan Bennett; and litigation partner Anna Rotman.

Read more details.

Oil & Gas Journal will discuss highlights of the publication’s annual Midyear Forecast in a free webinar scheduled for July 15 at 10 a.m. CDT.

“The Midyear Forecast is a special report that uses first-half data to update projections that appeared in OGJ’s Annual Forecast and Review this past January,” the Journal says on its website. “Both reports project oil and gas markets through the end of the year worldwide, analyze demand product by product in the US, and highlight trends that will carry on beyond the current year. The webcast also will discuss political developments important to the oil and gas industry.”

Presenters will be OGJ Editor Bob Tippee and Senior Editor-Economics Editor Conglin Xu, who will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

Register for the webinar.

An article in King & Spalding’s Energy Newsletter discusses some of the issues that are typically addressed in a unitization and unit operating agreement (UUOA) that may require particular attention in the context of a cross-border unitization. Authors are Philip Weems and Nina Howell.

“An oil or gas reservoir may straddle adjacent contract areas,” the authors explain. “Unitization is the process whereby the straddling reservoir is jointly developed by the interest owners in the adjacent contract groups.  Joint development of a straddling reservoir is usually more economical and efficient than separate developments by the adjacent contract groups.  A key principle of unitization is that the straddling reservoir is physically developed as though the boundary between the contract areas does not exist.”

They advise that in a cross-border unitization, additional scrutiny may be necessary due to the complexities and limitations that arise due the reservoir being subject to the jurisdiction of two governments.

Read the article.

Six publicly traded energy producers have filed for bankruptcy and five of them opted to file in Houston since March, reports Reuters. The latest was Houston-based Linn Energy LLC, which filed on Wednesday.

“Lawyers who help decide where a company seeks bankruptcy protection say the Houston court could move some cases more quickly, saving oil-and-gas companies millions of dollars in potential legal fees, which can then be used to pay creditors,” the report says.

“More companies began to file in Houston after the court adopted a work order that aimed to expedite large cases by directing them to two of its six judges: Martin Isgur and Chief Judge David Jones.”

Read the article.

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It is estimated that roughly 300 upstream energy companies will file for bankruptcy in 2016, and many management teams are curious about hedging alternatives during the restructuring and bankruptcy process, write Ryan Bouley & Shane Randolph, Managing Directors at Opportune LLP.

“There are various alternatives management teams can take with their hedging programs, ranging from full liquidation to actually increasing hedge coverage,” they write.

In an article posted on Opportune’s website, they discuss the purpose of an effective risk management program, what typically happens to hedges during the bankruptcy process, and the hedging alternatives for a distressed company.

Read the article.

A coalition of U.S. state attorneys general received guidance from well-known climate scientists and environmental lawyers in March as some of them opened investigations into Exxon Mobil for allegedly misleading the public about climate change risks, documents seen by Reuters showed, Reuters is reporting.

The report says Peter Frumhoff of the Union of Concerned Scientists, which has urged action on climate change, and Matt Pawa, who litigated against Exxon in a global warming case, were listed as presenters at a March 29 meeting of more than a dozen state prosecutors. That information came from emails between the offices of attorneys general in New York and Vermont.

Environmental groups are pushing in court, at the U.S. Securities and Exchange Commission and in the offices of pension funds to demand more accountability on climate issues from big oil companies,” the report says.

Read the article.

Twenty-four states are suing to block the Obama administration from implementing its new clean power regulations — the cornerstone of a promise that the United States will reduce greenhouse gas emissions to limit global warming, but some Texas energy companies are not as unanimous in their opposition. That’s because Texas’ energy sector is transforming rapidly, reports Mose Buchele for NPR.

“We really see what we are promoting as a very Texas way to do this,” says Brett Kerr, a lobbyist and spokesperson for Houston-based Calpine Energy, the largest independent power producer in the country. Kerr says Calpine consumes 15 percent of the gas produced in Texas.

Read the article.

The Justice Department has sued to stop Halliburton Co. from acquiring oilfield services rival Baker Hughes, the Associated Press and CNBC are reporting.

The deal would combine two of the world’s three leading providers of those services to oil and gas companies and would create a bigger rival to the industry leader, Schlumberger.

“But Justice Department officials say in their lawsuit that the Halliburton-Baker Hughes deal threatens to raise prices and eliminate competition,” the report says.

Read the article.

Baker Botts has posted an on-demand video webinar hosted by partners Manny Grillo, Shalla Prichard and Jim Prince titled “Baker Botts Corporate Series: Staring Down the Barrel,” in which the moderators discuss the state of the energy finance market and the related legal developments.

The firm says the video shares insights from the finance and restructuring market and highlights some of the latest developments and trends. The program takes a look at the impact of last year’s deal activity and what it will mean for this year. The panelists comment on what they have seen and expect to see this year from both a legal and business perspective and the opportunities created by the markets.

Watch the video.

In petrochemical projects, the engineering, procurement and construction (EPC) contracts are often negotiated after the technology licenses have been negotiated between the technology licensors and the project owner, write Sean Goldstein, Jean Shimotake and Raymond Azar of White & Case LLP.

“Both sets of agreements are also typically settled before financing is sought for the project. Given the significant interrelationship between the EPC contracts and license agreements, and common lender requirements for the bankability of such project documentation, these timing differences may give rise to a number of issues.” they write.

They discuss issues for the EPC contractor, project owner and lenders, along with possible solutions.

Read the article.

On March 17, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a major proposal to revise the safety standards for onshore natural gas pipelines, reports Kevin A. Ewing of Bracewell LLP.

“The proposed rule follows years of study as well as specific direction from Congress requiring new pipeline safety initiatives. The proposal spans over 500 pages and contains numerous major and minor revisions and agency statements that together demonstrate PHMSA’s intention to assert substantially more control over the design, operation and maintenance of pipelines to prevent incidents,” he writes.

More pipelines would be subject to Integrity Management requirements if the rule is approved, he explains. “It would also expand the definition of regulated gathering lines, accelerate pipeline repairs, and set a higher bar for data gathering and analysis of risk, among other changes. The proposed rule does not address underground gas storage, valves and leak detection, or quality management systems.”

Read the article.

Bankruptcy Judge Shelley Chapman held that Sabine Oil & Gas Corp. has satisfied the standards for rejection of several gathering and handling agreements between Sabine and its midstream counter-parties, Nordheim Eagle Ford Gathering, LLC and HPIP Gonzales Holdings, LLC, report Ron D’Aversa and Douglas Mintz of Orrick, Herrington & Sutcliffe LLP in an article posted by JDSupra.com.

The authors say the ruling has limits, and the matter ultimately turns on whether certain covenants “run with the land” under Texas law.

“While the Court held that Sabine exercised reasonable business judgment in rejecting the agreements, the Court declined to decide ‘in a binding way the underlying legal dispute with respect to whether the covenants at issue run with the land,’ and instead offered a ‘non-binding’ analysis to determine the reasonableness of Sabine’s rejection. Thus, if the counter-parties can demonstrate that the covenants do run with the land in an adversary proceeding, Sabine may not be able to terminate those covenants,” according to the article.

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The rise of local bans on hydraulic fracturing, or “fracking,” by local governments has sparked a recent backlash in carbon-producing states, writes Kristen Van de Biezenbos of Texas Tech University School of Law in an article posted on the Social Science Research Network.

“In 2015, Texas, Oklahoma, and North Carolina passed laws that forbid any city, town, or other municipal body from banning fracking or passing certain regulations on the practice, by popular vote or otherwise. Other states are likely to follow suit,” she writes.

In an abstract, she says her article is the first to propose that cities and towns in those states could incorporate and enforce existing state environmental laws. “By doing so, those municipalities may be able to ensure compliance with those environmental regulations by oil and gas companies and minimize some of the environmental harms associated with fracking, even when they cannot enact outright bans on the practice. Further, this Article explains why the incorporation and enforcement of state environmental laws by cities and towns — and particularly cities and towns in states that have taken away local power to enact fracking bans — should not be expressly or impliedly preempted by those laws. Indeed, taking this approach would also further important policy goals inherent in federalism and help restore voter confidence in the democratic process.”

Read the article.

Two high-profile Texas attorneys were sued by a fishing boat captain who said they were involved in a scam to cheat BP Plc out of millions of dollars with false compensation claims for the Gulf of Mexico oil spill, reports Bloomberg.

Houston lawyer Tammy Tran said in a complaint Thursday that thousands of Vietnamese-American fishermen and women had their identities faked or stolen in the fraud, bankrolled by lawyers Bob Hilliard and John Cracken. Plaintiffs blame the lawyers in part for obstructing their efforts to pursue their own claims for payments under BP’s restitution program, the report says.

“Tran is seeking more than $100 million in punitive damages from Hilliard and Cracken to compensate the immigrants,” according to Bloomberg. “Many of them claim to have suffered mental anguish from “nightmarish memories” of Vietnam’s communist regime, revived by federal agents knocking on doors to investigate the identity thefts. Compensation is also sought for homes and businesses lost while waiting for BP to pay under its seafood accord.”

Hilliard denied the allegations.

Read the story.

Aubrey McClendon, the co-founder and former chief executive officer of Chesapeake Energy Corp., was indicted on charges that he conspired to rig bids for the purchase of oil and natural gas leases in northwest Oklahoma, reports Bloomberg.

“McClendon is accused of orchestrating a scheme between two ‘large oil and gas companies’ to not bid against each other for leases, the U.S. Justice Department said Tuesday in a statement. From December 2007 to March 2012, the conspirators decided ahead of time who would win the leases and the winning bidder would then allocate an interest in the leases to the other company, the government said,” according to the report.

While leading Chesapeake, McClendon embraced the fracking shale revolution that helped the company develop into what was for a time the largest U.S. source of gas.

Read the story.

Although continuing low oil prices affect the LNG industry in expected ways (e.g. delays and cancellations in the development of LNG export projects) and unexpected ways (e.g. take-overs between major players in an already consolidated industry), a prolonged LNG oversupply notwithstanding tapering Asian demand could be the most widespread industry impact in 2016, write Philip Weems and Monica Hwang in an article on King & Spalding‘s Energy Law Exchange.

The article examines the top ten questions the LNG industry may face this upcoming year. “Given that LNG is now considered the most valuable physical ‘commodity’ after crude oil, how the industry reacts to the oversupplied, low-price environment could have far-reaching consequences globally,” the article says.

Read the article.

Kirkland & Ellis LLP advised EIG Global Energy Partners on its $500 million equity commitment, on behalf of EIG managed funds, to Rice Midstream Holdings LLC, a midstream-focused subsidiary of Rice Energy Inc. and the indirect owner of the general partner of Rice Midstream Partners LP (NYSE: RMP). Rice announced the completion of an initial funding of $375 million of this investment. The full release is available here.

The Kirkland team was led by corporate partners Andy Calder and John Pitts; capital markets partner Matt Pacey; and debt finance partners Will Bos and Mary Kogut.

Barclays Capital Inc. acted as financial advisor and Vinson & Elkins L.L.P. served as legal counsel to Rice.

RMH will use approximately $75 million of the proceeds to repay all outstanding borrowings under its revolving credit facility and to pay transaction fees and expenses, and the remaining $300 million will be distributed to Rice Energy to fund a portion of its 2016 development program in the cores of the Marcellus and Utica Shales, Rice Energy said in a release. In addition, RMH will have an additional $125 million commitment from EIG (subject to designated drawing conditions precedent) for a period of 18 months.

Read more about the deal.

On January 22, 2016, Secretary of the Interior Sally Jewell unveiled a proposed rule to reduce the waste of natural gas that results from venting, flaring and leaks by oil and gas production on public and tribal lands, reports Van Ness Feldman LLP.

“The ‘Methane and Waste Reduction Rule’ — which was published in the Federal Register on February 8, 2016, setting off a 60-day comment period — would update existing provisions of the Bureau of Land Management (BLM’s) onshore oil and gas leasing and operations regulations and introduce new requirements aimed at curbing waste and minimizing royalty-free use of production,” according to the article written by Kyle Danish, Jonathan Simon, R. Scott Nuzum, and Avi Zevin.

Their article examines key legal and policy changes in the proposed methane and waste reduction rule.

Read the article.