AIPN Approves Asset Sale and Purchase Agreement
The Board of Directors of the Association of International Petroleum Negotiators (AIPN) is pleased to announce the publication of its 2020 Model International Asset Sale and Purchase Agreement (ASPA).
The 2020 Model International Asset Sale and Purchase Agreement is a standard form upstream asset acquisition document which can be used on a worldwide basis, tailored to the particular transaction and subject to any requirements of the jurisdiction in which the assets are situated. The Model ASPA is appropriate for use in transactions involving an assignment of all or part of a person’s interest in a granting instrument relating to an oil or gas concession or part thereof, for example a PSC or license together with such person’s interest in the associated joint venture and joint venture assets (e.g., infrastructure and facilities). The consideration involved in such transactions is usually, but not always, cash. The Model ASPA will typically be used with respect to projects that are in the development and production stage although it can also be used in the exploratory or appraisal stage.
The Model ASPA sets forth extensive optional conditions precedent to Completion which are broken down into Buyer’s Conditions Precedent and Seller’s Conditions Precedent. It is the first AIPN Model Contract to include detailed provisions for material adverse events. The Model ASPA envisages the purchase of a developed project and there are therefore substantial and complex provisions on economic adjustments which will positively or negatively affect the ultimate consideration. This is followed by detailed provisions on Undertakings of the Parties in the Interim Period and on Warranties and Indemnity including an extensive Exhibit 12 on Seller Warranties.
The 2020 Model ASPA is drafted primarily from an English law perspective but it also contains optional provisions which allow it to be used in any jurisdiction. It is intended to function seamlessly alongside the AIPN Model JOA, assuming, of course, that this is appropriate as multiple licensees may not always be involved.
The publication of the 2020 Model International Asset Sale and Purchase Agreement concludes an industry-wide effort. Led by Co-chairs Uisdean Vass (Ledingham Chalmers LLP), Christopher Strong (Vinson & Elkins LLP), and Elias Nucette (Shell International Ltd.), the drafting committee included more than 250 industry professionals from 58 countries. The committee held numerous meetings over three years to prepare this new AIPN model form.
The 2020 Asset Sale and Purchase Agreement set is available for download free for AIPN members and $185 for non-members.