After an energy transaction closes, unsatisfied parties increasingly are claiming that the other side misrepresented some material issue during the course of the deal. Not surprisingly, this phenomenon often occurs during rapid or unanticipated movements in commodity prices, cost of capital, development costs, regulation and the like.
Such fraud claims often focus on representations concerning the prospects of oil and gas production, including reserve estimates and general remarks concerning future production from certain leases or wells. Given the risk of such claims, in-house counsel need to ensure that company representatives know what they can and cannot say about the prospects for production when buying or selling energy assets.
