OGT704 Oil and Gas Contracts & RegulationYou are advising a new start-up company with no trading history, Dangermouse Limited (“Dangermouse”) but due to the expertise of the management team and the backing that they have from a well-known venture capitalist group they have been approved by DECC as potential licencees on the UKCS.Dangermouse are in the process of negotiating the acquisition of certain operations from Orbit Enterprises Limited (“Orbit”). Orbit is a fully owned subsidiary of Planet Group plc, which has operations on a world-wide basis.Orbit owns a small gas field in the Northern North Sea and closely borders Norwegian territorial waters. Orbit have two platforms operating there. Dangermouse will be acquiring the interests of Orbit in this field. Orbit is operator of the field and has a 59% interest in the field with Penfold Limited (“Penfold”) owning the remaining 41%.So far Dangermouse has not seen original documents in full as yet but has been passed an information memorandum and attended an “off the record” presentation covering the following points:• The Joint Operating Agreement (“JOA”) between Orbit and Penfold that covers the field contains restrictions on the transfer of interests to the effect that once Orbit has agreed terms for a transfer of interests to Dangermouse then Orbit must offer such interests to Penfold on the same terms. Penfold then has 120 days to accept such offer.• Penfold has previously attempted to buy Orbit’s interest in the field and could prove uncooperative.• The pass mark for operating decisions under the JOA is 60%.• There is a gas discovery/prospect within the same block, just 1 mile away from the field, which Orbit wishes to develop, however so far Penfold have refused to commit resources to such a development.• Production from the field was originally intended to last until 2017 however there have been problems with the quantity and rates of production over the last year and the field’s reserves have declined quicker than expected. Liquids have also been produced together with the gas.• There is a long term “supply type” gas sales agreement (“GSA”) between Orbit and a major utility which also runs to 2017 whereby guaranteed minimum volumes are to be delivered. Reservoir risk is expressly excluded from constituting Seller’s Force Majeure.• Gas is exported in a “common stream” via a pipeline system used by 4 other fields under a Transportation Agreement (“TA”). The TA shall stay in effect will last for as long as the GSA is in force.• The assignment provisions in the GSA and TA both refer to no assignments or transfers being allowed without the prior written consent of the non-assigning parties (such consent not to be withheld unreasonably) but withholding of consent shall be reasonable if withheld on the basis of lack of technical ability or financial standing of the assignee.RequiredOn the basis of the limited information above please briefly advise your client:1. What deal structure would best suit such an acquisition and what sort of contractual arrangements will require to be put in place in order to transfer Orbit’s interests in the field to Dangermouse.2. What issues or problems would you highlight as needing greater investigation and/or warranty cover?3. If Dangermouse takes an assignation (assignment) of the various contracts and agreements that Orbit has entered into what concerns might you have in this situation? How would you advise Dangermouse generally to ensure that the assignments would operate as intended with as little disruption to the commercial operations as possible?4. What other obstacles will have to be overcome in order to successfully acquire the target interest and suggest any possible solutions.