If you are looking to purchase oil and gas properties, you can safely assume that, prior to entering into negotiations, you will be required to into an agreement concerning the confidential nature of the information and data that will be exchanged. In short, you will be required to keep a lot of information confidential.
Among the provisions typically found in such agreement, are the following:
1. Identification of the material that is confidential
2. An agreement that you will have your contractors, employees, and other advisors bind themselves to the confidentiality agreement
3. Any exceptions to non-disclosure requirements
4. An agreement that you will return any evaluation materials (and all copies) provided to you if a sale is not consummated
5. If it is a proposal to jointly acquire oil and gas assets, properties, or leases, there may be a term limited non-compete agreement
6. Remedies for a breach of the confidentiality agreement, including a forum where any dispute is resolved and the contractual shifting of legal fees to the prevailing litigant
The Industry Standard & Credibility
If you find yourself spending a great deal of time and energy negotiating the confidentiality agreement, then there is a problem. There are clear industry standards – and they are advantageous to all parties involved. The only issue that should ever be a matter of serious discussion is the scope (often geographic) and term of the non-compete agreement.
Of equal importance, it is imperative that your contractors and employees be aware of the nature of the confidential relationship – and that the information you receive is properly managed in a confidential manner. Aside from obvious legal problems for your failure to do so, your credibility will be completely lost. You will be responsible if your contractors or employees are sloppy – confidentiality is your job, and it is a serious one.
Confidentiality is a serious matter and serious purchasers (and their contractors, employees, and agents) take it seriously. If someone does not, they should not be on the acquisition team.
by Jack M. Wilhelm
Edward Wilhelm and Jack Wilhelm provide assistance to buyers and sellers of oil and gas properties.
THE WILHELM LAW FIRM, 5524 Bee Caves Road, Suite B5; (512) 236 8400 (phone); (512) 236 8404 (fax); www.wilhelmlaw.net
DISCLAIMER: The information on this site is not intended to and does not offer legal advice, legal recommendations or legal representation on any matter. You need to consult an attorney in person for legal advice regarding your individual situation.