BC LNG: the Path to First Gas

Jonathan Drance and Brandon Mewhort -

There have been at least 15 proposals to build LNG export terminals in British Columbia. Together, these proposals contemplate building LNG terminals capable of processing in excess of 200 million tons per annum (MTPA). This capacity represents more than 50% of current world-wide LNG capacity and is more than double the capacity of Qatar, currently the global leader in LNG. Obviously, not all of these projects will be completed. Indeed, it is unlikely that anything near this level of capacity will be developed in BC, particularly if current market conditions persist.

However, at least some of these proposed projects are worth closely monitoring. There are three LNG projects - Woodfibre, Douglas Channel and the Petronas - led Pacific Northwest – which are widely reported to be making (or at least aiming to make) a final investment decision (FID) as soon as practicable and, in any event, at some point in 2015.

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Canadian oil and gas M&A legal diligence toolkit

Chip Johnston and Carolyn Simpson

Understanding client legal diligence goals has become increasingly important in the face of challenging economic conditions in the energy sector. Buyers are often frustrated by the high cost of legal diligence and the unwieldy work product created by external counsel. To maximize efficiency and ensure that clients are receiving high quality and useful information, we have prepared the Canadian Oil and Gas M&A Legal Diligence Toolkit.

Rather than offering legal advice, our approach in developing the Toolkit has been to describe a series of management practices that we feel can be used to direct the work of any Canadian legal counsel, external or internal.

The Toolkit outlines three approaches to legal diligence, offering clients a menu from which they can choose methods and design an effective diligence process.

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2015 oil and gas M&A review - themes and deal points

Chip Johnston, Brad Ashkin, Andrew D. Wong -

Recently, our firm’s Calgary office completed a review of M&A themes and deal terms in the oil and gas sector from January 1 to December 31, 2014. This study contains a list of oil and gas M&A transactions over the full year period, a review of key trends in deal terms, a summary of notable features of each transaction, an analysis of the timelines and a numerical analysis of key deal terms. A few key themes emerged from our review.

The period started upbeat, with a rebound in activity confirmed by almost as many deals announced in H1 2014 as all of 2013. But the party was short-lived, with eroding market conditions undoing several transactions late in the year. The announcement of one of the largest ever domestic Canadian energy deals was perhaps both a bright spot in the period and a symptom of the market conditions, with pricing that was widely seen as favouring the purchaser. Financial buyers were almost totally absent in 2014, which left room for domestic and international strategics to dominate the field.
 

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Key developments in Canadian public markets law for the oil and gas industry - first quarter 2015

The first quarter of 2015 saw a number of regulatory developments in Canadian capital markets that may specifically affect companies in the oil and gas industry. Below, we’ve compiled a list of key legal developments since January 1, 2015 that may be of particular interest, along with corresponding links to our securities blog.

M&A

  • Canadian regulators publish draft rules to amend the take-over bid rules to require a 120-day minimum bid period (subject to the right of the target to waive to 35 days) a minimum 50% tender condition and a mandatory 10 day extension after the satisfaction of all other conditions. This is a proposal - no changes in the rule are expected for another year.
     
  • OSC reviews recent related party transaction disclosure, encouraging issuers to provide more information about insider participation in private placements and board process related to transaction approval
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NDP Victory

Glenn Cameron, Fred Erickson and Chris Nixon -

On Tuesday night the left leaning New Democratic Party (NDP) was elected to govern the Province of Alberta. The NDP’s victory ended 80 years of conservative governments in Alberta that began with the election of the Social Credit Party in 1935.

Highlights of last night’s historic election include:

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Drafting an oil and gas M&A confidentiality agreement: updated survey of market terms and checklists

Confidentiality agreements are typically employed to protect the disclosures made by target companies to potential purchasers, and to require purchasers to deal with the target before making a bid. It is essential to both sides that confidentiality agreements are drafted carefully in order to avoid adverse consequences, in both M&A and financing transactions. At the same time, in many cases these agreements need to be completed quickly, sometimes without the involvement of internal or external counsel. It is critical that internal counsel and others have reliable tools to allow them to settle confidentiality agreements efficiently and with confidence.

In a 2013 blog post, we highlighted our checklist for building an oil and gas confidentiality agreement that included a list of issues to consider from the perspectives of both the discloser and recipient. We have updated this checklist, also updating our review of common terms found in confidentiality agreements, now based on a review of 50 recent transactions. We are pleased to share the updated Toolkit for Confidentiality Agreements in the Canadian Oil and Gas Sector for M&A and Financing Transactions, and we welcome your comments and feedback.

Ontario's cap-and-trade system in context

P. Jason Kroft and Tamir Birk -

As we recently discussed here, on April 13, 2015, Ontario Premier Kathleen Wynne formally announced plans to create a cap-and-trade system for greenhouse gas emissions in Ontario, to be linked with the systems already in place in Quebec and California. This is not the first time Ontario’s government has announced intentions to implement cap-and-trade in the province; prior efforts have lacked the political will and determination to bring cap-and-trade to fruition. In this blog post, we highlight some of the major recent cap-and-trade developments in Ontario and the U.S. to help put the re-launching of the province’s cap-and-trade efforts in context.

The Acid Rain Program (ARP), established under Title IV of the 1990 Clean Air Act (CAA) Amendments, was the first federal U.S. law to adopt an emission trading system on a large scale and was a precursor to a similar regime that was established in Ontario shortly thereafter. The ARP was a market-based initiative taken by the United States Environmental Protection Agency (EPA) beginning in 1995 to reduce atmospheric levels of sulfur dioxide (SOx) and nitrogen oxide (NOx), the primary precursors of acid rain, from the power sector. The program set a permanent cap on the total amount of SOx that may be emitted by electric power plants in the country, with allowances being bought and sold in secondary markets. Reductions in NOx emissions were also required and were mainly achieved through retrofits to coal-fired plants. The program was largely hailed as a success, significantly reducing SOx and NOx emissions in the U.S. In Ontario, the first air emissions trading program was introduced in 2001. The program includes the Emissions Trading Code, which was intended to supplement Ontario Regulation 397/01, which governs emissions trading under the Ontario Environmental Protection Act. The program introduced the use of a market-based system for reducing emissions of NOx and SOx in the province.

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Ostrander Point Wind Project Returns to the Environmental Review Tribunal

Paul Neville and James Wilson -

On April 20, 2015, the Court of Appeal for Ontario released its decision in Prince Edward County Field Naturalists v. Ostrander Point GP Inc. As previously reported (on appeal to the Divisional Court) the case concerns a decision of the Environmental Review Tribunal (Tribunal) to revoke a Renewable Energy Approval (REA) granted by the Ministry of the Environment (MOE) to Ostrander Point GP Inc. (Ostrander), permitting Ostrander to construct nine wind turbines (the Project) at Ostrander Point, about fifteen kilometres south of Picton, Ontario.

The Tribunal revoked the REA on the basis of submissions by the Prince Edward County Field of Naturalists (PECFN) that the Project would seriously and irreversibly harm a species of turtle called the Blanding’s turtle.

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Significant oil and gas M&A and finance transactions in Q1 2015

Chip Johnston, Carolyn Simpson, Jennifer McPherson, Erin Dand -

In the first quarter of 2015, M&A and financing activity in the oil and gas sector was unsurprisingly slow. As we predicted early in the year, purchasers have paused to see if prices continue to fall, and targets are trying to avoid selling at the bottom of the cycle. As low commodity prices continue, we expect to see M&A activity pick up as well capitalized participants move to consolidate and expand their asset bases.

Following is a summary of M&A and financing transactions that occurred in the first quarter of 2015, with a transaction value of $150 million or greater.

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Key developments in Canadian private M&A law for the oil and gas industry - Q1 2015

Chip Johnston, Carolyn Simpson, Jennifer McPherson, Brandon Leitch -

The first quarter of 2015 saw a number of legal developments that may specifically affect private companies in the oil and gas industry. Below, we’ve compiled a list of key developments in Canadian law and regulatory practice since January 1, 2015 that may be of particular interest.

Oil & Gas and Regulatory

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