Letter of Intent
(Upstream Oil & Gas)

Summary

This template is a letter of intent used to memorialize the general terms of a proposed oil and gas lease transaction that has a regulatory component. It outlines certain key terms and conditions of a future definitive agreement, but is not a binding agreement itself. This template contains practical guidance, drafting notes, and optional clauses. When parties are interested in entering into a commercial agreement they often begin discussions by trading draft letters of intent that outline key headline terms to the eventual definitive agreement. Letters of intent may go into significant detail regarding the proposed transaction, but are generally non-binding. While they may show the general outline of a proposed transaction, specific terms may change in the due diligence process, or as economic realities change as the parties get closer to consummation of the ultimate transaction. While generally non-binding, letters of intent are still vitally important for commercial deal-making, as they help the parties level-set expectations and come to a meeting of the minds on large-scale issues. This specific letter of intent deals with certain state (and/or federal) regulatory filings and orders that will need to be final and accepted prior the commencement of an oil and gas production and development project. The letter of intent contains certain terms which are binding on the parties, such as with respect to confidentiality obligations, and other terms which are not binding including the obligation to proceed with the contemplated transaction and the proposed terms of the deal. The letter of intent may need to be revised depending upon the particularities of the subject oil, gas, and/or hydrocarbons production and development project. For additional information on drafting letters of intent, see Letters of Intent, Letters of Intent in Private M&A Deals, and Letters of Intent in Public M&A Deals. To review other letters of intent to compare style and content, see Letter of Intent (Joint Venture, Majority/Minority) and Letter of Intent (Asset Acquisition).