Refiners Re-entering Retail Face Legal Issues and Risks Formerly Eliminated or Reduced through Divestment


For more than a decade, major refiners unbundled their integrated operations to focus on the more lucrative upstream business (resource production and refining operations) in markets that had robust prices.  They increased expensive exploration efforts and made major investments to augment refining capacity.  In part to fund those activities, they sold or spun off downstream assets.  These divestment initiatives focused on retail operations, where margins had been steadily shrinking for decades and litigation and retail network management costs had been ballooning.  This move to divest retail assets came after a decade or so in which those same companies heavily invested in company-owned and – operated retail sites with convenience store operations.
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Six Oil and Gas Legal, Regulatory and Compliance Issues for 2016


Following another record year of crude oil production, the impact of depressed oil prices is finally expected to impact domestic output in 2016, with U.S. production expected to decrease by 570,000 barrels per day. While world oil demand is anticipated to increase by 1.2 million barrels per day during 2016, global production is anticipated to decrease by 600,000 barrels per day with the bulk of such decrease coming from the United States. Even so, global stocks of produced crude oil still exceed 300 million barrels. As the domestic oil and gas industry adjusts to the reality of an extended low price environment, several issues will be at the forefront during the coming year.
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Managing Global Anti-Bribery and Corruption Compliance


Companies in the oil and gas sector face a complex operating environment around the world, particularly in the field of anti-bribery and corruption (ABC).  Oil and gas companies are continuing to do business and expand into a growing number of countries whose politics and societies make it exceedingly difficult to calibrate and execute against an effective ABC compliance framework.
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The Characterization of an ORRI Conveyance in Bankruptcy


A bankruptcy court’s characterization of a debtor’s pre-petition conveyance of an overriding royalty interest (“ORRI”) has an important effect on whether that ORRI is part of an oil and gas debtor’s bankruptcy estate and, in turn, what rights the ORRI holder has with respect to that interest. If an ORRI conveyance is characterized as the transfer of a real property interest, the conveyance is generally excluded from the debtor’s bankruptcy estate and the ORRI holder’s interest may not be affected by the bankruptcy. If, however, a bankruptcy court characterizes the ORRI conveyance as a disguised financing transaction, then the ORRI holder may find itself a creditor with a claim subject to bankruptcy discharge.
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