This is the first in a series of blog posts - the "Oil and
Gas Checklist Project" - regarding checklists for agreements
commonly used by the oil and gas industry in acquisition, finance
and commercial transactions. These materials are designed to assist
internal counsel and business people to negotiate these forms by
providing an overview of the key terms that may be relevant for the
One of the most important parts of any contract review is
assessing the ideas that are contained in an agreement to determine
whether it addresses all of the potential issues that may arise.
Unless a lawyer or business person is experienced with the
negotiation of a particular kind of agreement, it can be a
time-consuming and potentially risky process to accurately identify
the deal points that matter.
Instead of reducing these ideas to a precedent or standard form
agreement, each checklist contains a summary of the provisions that
either side may wish to address in the form. Although the
checklists will not address every transactional issue or style, our
hope is that they will address most of the issues that commonly
arise in each type of agreement we cover. Our intention is to
produce checklists which offer more detail and ideas that common
legal reference services and which are rooted in the culture and
norms of the Canadian oil and gas industry.
These forms will be in a constant state of development, as we
attempt to accommodate new ideas and lessons from practice
accumulated in our business and those of our clients and friends.
We hope that over time this collected work will become a valuable
reference service for the legal and business community, allowing
them to make more accurate legal decisions more quickly.
Oil & Gas Consulting Agreement Checklist
The Oil & Gas Consulting Agreement Checklist is
seven pages long and contains 40 different checklist items with
commentary as to whether they are market, egregious or otherwise.
It covers a range of essential considerations for each party,
Who should be party to the
What is the appropriate standard of
Should there be any restrictions on
activities of the consultant outside of the consulting
How should consultants be paid?
How do the parties address the tax
risks of the arrangement?
What obligations of the
confidentiality and loyalty should the consultant have?
How should the company be indemnified
by the consultant?
How should the consultant be
indemnified by the company?
How should the consulting agreement
In our experience, taking into consideration the biases and
bargaining positions of both companies and consultants, four
high-value negotiating points for the parties to consider are:
Indemnification. The consultant should limit
its liability to the company by capping indemnity amounts and
excluding its employees from claims. The company should reject
these limitations which provide no incentive to the
consultant's employees to comply with the consulting
Insurance. The company typically wants its
consultants to maintain insurance satisfactory to it for the term
of the consulting agreement. The consultant, on the other hand, is
in the position to determine what is actually appropriate for the
services it will provide but should ensure that the company's
insurance covers the consultant in any third party claim related to
providing those services.
Termination. Due to the temporary nature of
consulting mandates, the consultant will want to be entitled to a
longer termination notice period so that it can develop alternative
mandates. The company will want the ability to terminate the
services on short notice and keep the consultant on the hook for
its other obligations, such as confidentiality and non-competition.
The consultant should ensure these obligations time out within a
defined time period after termination.
Confidentiality. The company should prohibit
the consultant from being able to give advice to other clients on
the same project for a period of six months following the end of
the consultant's mandate. Unless the company has the bargaining
power and this is a competitive bid situation or sensitive
intellectual property is involved, the consultant should reject
this provision as aggressive and off-market.
To preview the Oil & Gas Consulting Agreement
Checklist, please click
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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In Bank of Montreal v Bumper Development Corporation Ltd, 2016 ABQB 363, the Alberta Court of Queen's Bench enforced the "immediate replacement" provision in the Canadian Association of Petroleum Landmen 2007 Operating Procedure...
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