It only took one week and two lawyers for Range Resources Corp. of Fort Worth and Vanguard Natural Resources LLC of Houston to negotiate a definitive agreement for Vanguard to buy Permian Basin assets from Range.
"It was about a week between acceptance of bid and completion of purchase-and-sale agreement," says David Poole, general counsel at Range.
Poole, a one-man legal department, says he and Vanguard’s outside counsel Patrick Doherty, a partner in Doherty & Doherty of Houston, handled the legal issues on the $275 million deal.
About Range, Poole says, "We’ve done over $2 billion in asset sales over the last two years, and this has to be one of the most efficient. Part of it was the fact you didn’t have a lot of lawyers thrown at it."
"Vanguard moves fast," Doherty says.
On Feb. 28, Range and Vanguard announced an agreement for Vanguard to buy natural gas, oil and natural gas liquid assets in southeast New Mexico and West Texas from Range for $275 million. The acquisition is expected to close around April 1, but it is effective as of Jan. 1.
In early February, Poole says, Range solicited bids for the Permian Basin assets and selected Vanguard’s bid. Poole says they had a good start on an agreement because, when Range put the assets out for bid, it provided a draft purchase-and-sale agreement (PSA) to prospective bidders. Doherty says he looked at the draft PSA before Vanguard submitted a bid and gave Vanguard executives his take on it.
After Range decided to negotiate with Vanguard, Poole says he, Doherty and businesspeople from both companies got together at Range’s office in Fort Worth on Feb. 19. Poole says they sat down with the draft agreement on a computer screen and hashed out many of the terms.
"We got to yes really quickly," he says. "Like any deal, there were certainly differences of view of certain terms . . . but none that proved to be insurmountable."
Doherty, who has handled transactional work for Vanguard for about five years, says it’s not uncommon for Vanguard to put deals on a fast track.
"That’s their approach. They don’t get too wadded up on semicolons in the PSAs. It’s a narrow range of negotiating points. They know what they want," Doherty says.
The most time-consuming items to negotiate were representations and warranties and indemnities, Doherty says.
Despite the speed of the deal, Poole says he and Doherty didn’t put in extraordinarily long days, although they did spend some time on the deal during the weekend of Feb. 23 and 24. He says Range had a self-imposed deadline, because it wanted to make the divestiture announcement as part of the company’s 2012 earnings report.
In a Feb. 26 press release about the 2012 financial results, Range reported the definitive agreement without identifying Vanguard, and the companies issued a press release about the transaction two days later.
Poole, who has been GC at Range for nearly five years, says he’s completed at least 10 asset sales at Range, and none of them were negotiated in a speedier fashion. However, in many instances, he was the sole lawyer for Range on the transactions, he says.
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