Thompson & Knight, V&E, Simpson Lead on Offshore Oil Deal

, The Am Law Daily


SandRidge Energy oil tank battery near Alva, Oklahoma.
SandRidge Energy oil tank battery near Alva, Oklahoma.

SandRidge Energy is pulling out of its offshore drilling venture.

The Oklahoma City–based oil and gas company said Tuesday it has agreed to sell its Gulf of Mexico energy assets to Fieldwood Energy, a portfolio company of private equity firm Riverstone Holdings, in a deal worth about $1.12 billion.

The transaction's terms call for Houston-based Fieldwood to pay SandRidge $750 million in cash for the assets, while also assuming $370 million in abandonment liabilities. The oil and gas assets changing hands in the transaction produced roughly 23.5 million barrels of oil equivalent over the past month, according to SandRidge.

SandRidge acquired the assets in question just two years ago when it paid $1.28 billion in cash and stock for Dynamic Offshore Resources. (Fieldwood is now run by Dynamic Offshore's former management.) The purchase represented a departure for SandRidge, which has traditionally focused on onshore drilling initiatives in the Midwest and Texas. As Reuters notes, activist investors TPG-Axon and Mount Kellett Capital Management criticized that deal, and those shareholder complaints ultimately led to the dismissal of SandRidge CEO Tom Ward last summer.

In announcing the deal with Fieldwood, SandRidge said it would reinvest the proceeds from the sale into its drilling projects in the Mid-Continent oil field. The deal also calls for SandRidge to retain a 2 percent overriding royalty interest in two of the exploration projects included in the Gulf assets.

The transaction—which is expected to close in the first quarter of this year—is Fieldwood's second acquisition of Gulf assets in the past year. The Riverstone-owned company bought rival Apache Corporation's Gulf of Mexico holdings last July in a deal worth $3.75 billion.

Fieldwood has turned to Thompson & Knight for legal advice for the deal with SandRidge. The firm's team on the matter includes Houston-based corporate partner Timothy Samson, as well as tax partner R. David Wheat, environmental partner James Morriss III, energy finance partner Andrew Flint and environmental counsel Ashley T.K. Phillips. The Thompson & Knight associates working on the deal are Lucas LaVoy and Andrew Wootton. Fieldwood's in-house team is led by company attorneys Richard Black and Thomas Lamme.

Simpson, Thacher & Bartlett—which advised Fieldwood on last year's agreement with Apache—has also landed a role on the current deal with SandRidge, advising Fieldwood on the acquisition of financing for the deal. Simpson's team is led by Washington, D.C.–based corporate partner Christopher Brown. Simpson associates Matthew Einbinder and James Doyle are also working on the deal.

Vinson & Elkins, which also advised Fieldwood on the Apache deal, is representing SandRidge this time around. The V&E team is led by Houston-based energy transactions and projects partner Douglas Bland and associate Elizabeth Radack. Tax partners Thomas Crichton and Todd Way are also working on the deal along with associates Christopher Boling, Daniel Hatch and Tan Lu. Philip Warman, a former V&E attorney, serves as SandRidge's general counsel.

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