1. Asset Descriptions

Asset Descriptions

Early in the negotiation of the PSA, care should be taken by both Buyers and Sellers to ensure that the PSA accurately and completely describes the assets being transferred—either through disclosures in the body of the PSA itself or in the accompanying exhibits and schedules. While this may seem obvious, ancillary assets can easily slip through the minds of management as negotiations on other issues progress, only to be discovered at the eleventh hour before closing. As it is often the case that the Seller is in the best position to prepare such a list, the Buyer should carefully review the list to ensure that the assets listed therein accurately reflect any preliminary diligence conducted by the Buyer's representatives. For E&P transactions, it is often important to address any drilling equipment, storage tanks, specialty tools, separation facilities, drilling logs, records and permits relating to the E&P assets. For midstream transactions, meters, valves, compressors, cathodic protection equipment, records, surveys, maps, real estate and easements should often be considered in addition to the underling pipeline.

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