OIL AND GAS CLENT ALERT: Oil and Gas Industry 2013 Overview

    11 February 2013

    Throughout 2012, Patton Boggs continued its strong history of representing providers of capital to the energy industry. For 2013, we anticipate continued growth in this area. Further, we believe that 2013 will be an even more active year in the energy space than 2012, particularly in the oil and gas sector. For 2013, we envision the following:

    • Horizontal drilling and hydraulic fracturing will continue to drive the cost effective recovery of hydrocarbons previously thought undevelopable.

    • Continued movement of electrical generation away from coal and toward the more environmentally friendly natural gas should help buoy natural gas prices. The expectation that the Federal Government will allow issuance of additional permits for the exportation of LNG should also lift natural gas futures prices. 

    • Patton Boggs will be assisting clients in the development of more natural gas markets focusing on LNG export and other uses which should lift and stabilize natural gas futures price. 

    • This anticipated expansion of the oil and gas market will drive the need for additional infrastructure development such as pipelines, and may also require refiners who are faced with making specific updates to their infrastructure to address the gravity profile and chemical make-up of the crude to consider adding additional capacity. 

    • We expect that oilfield service companies will continue to benefit from the oil and gas market growth. Similarly, the treatment of hydraulic frac flow-back water including disposal of and the practical application of re-use and re-cycling technologies will continue to dominate general discussion in the producing states. Developing state regulatory policy may incentivize growth of these services. 

    • We expect M&A transactions to remain level or increase as a result of consolidation in this market sector after year upon year of significant growth. 

    • Finally, but significantly, the Administration will be focusing on the oil and gas industries as they seek to generate revenue to offset the sequestration cuts of up to $12 billion a month and $1.2 trillion over 10 years. Appropriate steps to meet this dynamic will be required by industry advocates and counsel. 

    ENERGY FUNDS AND TRANSACTIONS: 2012 IN REVIEW

    Patton Boggs clients provide debt and equity financing to the full range of the energy business. We represent various domestic and international financial institutions and funds in senior secured, subordinated and mezzanine debt transactions in standard and industry-specific financing structures. We also represent various private equity providers in company acquisition, recapitalization and distressed balance sheet reorganization transactions.

    Our Oil and Gas practice group enjoyed a robust year in 2012 with respect to financing transactions. During 2012:

    • The Oil and Gas Practice Group at Patton Boggs closed in excess of $20 billion in E&P and midstream senior secured oil and gas financing transactions in 2012. Many of these transactions involved complex borrower and collateral structures, and included domestic, offshore and international collateral pools in both conventional and non-conventional plays. 

    • The Firm participated in the Kinder Morgan $38 billion acquisition of El Paso Corporation as well as numerous other E&P and midstream purchase and sale transactions throughout the United States. 

    • We actively represent lenders in the oilfield services industry, having closed billions of dollars in transactions in 2012

    • We also regularly advise hedge providers on commodity hedges and structures in support of oil and gas transactions, and prepare the hedge documents related to the hedges.

    ELIZABETH AMES JONES – ENERGY REGULATORY POLICY

    In January, Patton Boggs welcomed Elizabeth Ames Jones to the firm as a senior policy advisor. As a former Chairman of the Texas Railroad Commission, Ms. Jones is widely recognized for her keen understanding of energy regulatory policy. Ms. Jones also served in the Texas Legislature from 2001 to 2005. She divides her time between the firm’s Dallas and Washington DC offices.