Opportunity knocks in energy industry crisis, say lawyers – Lexpert

Janice Buckingham, Lorne Carson

Mar 21, 2016

While continued uncertainty is expected for the Canadian oil and gas industry in 2016, Anthony Davis writes about defensive strategies some in the industry are using to weather the downturn in his article “Opportunity knocks in energy industry crisis, say lawyers” for Lexpert magazine.

Experts don’t agree where the price of oil will go this year. Some say it may hit $20 while others predict it could recover to $60 or $70 a barrel. The unpredictable future has many in the industry playing defence, taking actions like renegotiating credit agreements and financial covenants.

Lorne Carson, a Calgary-based partner in Osler’s Corporate Practice Group, told Lexpert these kinds of negotiations can be “a bit more tense. But it is business that needs to be done…. Basically what companies do in harder times is they look at selling non-core assets where they can raise money, pay down debt.”

Companies that are not in great financial distress may take defensive actions like selling royalty assets to pay down debt or reinvest in operations.

“As much as we wanted to hope there would be a short-term price recovery,” Janice Buckingham, who is based in Calgary and serves as Chair of Osler’s Oil & Gas Practice and Co-lead of the Energy Practice, told Lexpert, “the lower-for-longer price mentality has been accepted by companies. So we’re looking at different scenarios in order to maintain profitability in the hopes prices do recover — because they always do. And when prices recover, they will be well positioned.”

To read more about these and other opportunities for innovation, read Anthony Davis’s full article “Opportunity knocks in energy industry crisis, say lawyers” online at Lexpert, March 21, 2016.