10. Transition Services

Transition Services

Often, at the time of closing an oil and gas transaction, the Buyer will not have the resources necessary to immediately operate the assets in the way previously operated by the Seller prior to closing. This is often the case when the Buyer does not retain any (or few) of the Seller's employees post-closing. In order to allow the Buyer to get "up to speed" in its operation of the assets, Buyers will often request that the parties enter into a Transition Services Agreement, contemporaneous with the closing of the underlying asset transfer. These agreements are typically short in duration and provide that the Seller will continue to operate certain aspects of the assets for a negotiated period of time and, in exchange, the Buyer will reimburse Seller for certain costs the Seller incurs during the term of the agreement. These agreements provide the Buyer time to recruit skilled employees, or to relocate its current employees, in order to properly operate and maintain the assets. In the oil and gas industry, these agreements are often particularly useful to Buyers when the transferred assets are located within geological plays where the Buyer has not historically maintained operations.

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