Shell’s in-house legal team recently took the lead on the sale of $3.8bn worth of its own North Sea oil and gas assets, with help from panel firm Clifford Chance (CC), as part of a debt reduction push following its takeover of BG Group.
The deal sees British investment firm Chrysaor Holdings pay an initial sum of $3bn plus an additional payment of up to $600m, subject to commodity prices, and $180m for future discoveries. A Shell spokesperson said: ‘This approach to legal delivery, with a Shell team in the lead and backed up by limited external legal support, is typical for us. It allows our in-house business lawyers to work on the most complex, high-value projects, drawing on the expertise of a wide network of internal legal experts, and delivering value to the business at competitive cost and appropriate risk profile.’
CC was the lead external adviser to Shell – for which senior legal counsel Paul Morris played a key role – acting on the purchase agreement with a team led by CC’s energy partner John Wilkins and M&A partner Graham Phillips. Chrysaor was advised by Dechert M&A partner Jonathan Angell, with specialist oil and gas advice from Bond Dickinson partner Paul Stockley.
White & Case partners Ian Bagshaw (pictured) and Richard Jones advised Harbour Energy, an investment vehicle managed by EIG Global Energy Partners, on its agreement to lead for Chrysaor and partly fund the acquisition of the oil and gas portfolio. Watson Farley & Williams partner Joe Levin also acted as an adviser for third-party banks.
Bagshaw told Legal Business: ‘Given the size of Shell’s legal team, this is probably a sign of things to come for significantly experienced in-house legal teams with minimal external firm support.’
The deal was also one of the first to use a reserve-based loan on a leveraged buyout, an oil and gas-based product that allows the principle to fluctuate in line with the reserve-based price of oil or Brent Crude.
Bagshaw added: ‘For the banks who are experienced in oil and gas, this is the base from which they have historically lent operating capital to businesses. Using that for an acquisition loan was a big thing. There is a bubbling up of opportunities where people are using these banks and this style of loan to do these deals.’
The transaction was the third major matter for White & Case’s private equity team in January. Global practice head Bagshaw led on Bridgepoint Group’s recent £750m buyout of vehicle business Zenith from HgCapital, while the team also advised Bridgepoint in January along with Nordic Cinema Group on the $929m sale of Nordic to AMC Theatres.
madeleine.farman@legalease.co.uk