Lexpert Magazine

10 LEXPERT MAGAZINE | JUNE 2018 | RECENT DEVELOPMENTS IN BUSINESS LAW | LEXPERT: What was your experience of working on the acquisition? What were the negotiations like? Litton: It was challenging. e transactions and agreements were complex as the parties were entering into a long-term relationship and not a simple purchase and sale transac- tion. We were working with a tight time- line as the parties formally began negotiat- ing a term sheet just before the holidays and there was a strong desire by both parties to complete the transaction in the first quar- ter of 2018. Borden: For reasons that are confidential, both parties were incented to sign the pur- chase and sale agreement within roughly six weeks of when we started our serious negotiations. Litton: One saving grace was that those in- volved in the negotiations, on the business side and the legal side respectively, know each other well. is familiarity helped us to identify and address issues likely to be "hot buttons" for the other side before they became overly contentious and to resolve the inevitable impasses that arose during our negotiations. Borden: ere were also more face-to-face negotiating sessions as the parties were of the view that it was more efficient to ac- tively discuss most major points as opposed to exchanging dras. Quesnel: It was a great experience. Long- term TSAs present complex and challeng- ing issues for the business and legal teams on each side of the deal. e achievement of "immediate" gains needs to be balanced against the requirement to satisfy long- term objectives of both parties. As a result, negotiations were general cooperative and highly solutions-oriented. LEXPERT: What was the most challenging aspect of this deal? Litton: is wasn't just a purchase and sale transaction; the parties were also negoti- ating a transportation services agreement with an initial term of 30 years. When negotiating a business relationship that will last that long, you're obviously deal- ing with a lot of unknowns — such as, what will each party's business, the mar- kets and the regulatory landscape look like in 10 or 20 years? As a result, we spent a lot of time trying to look through a crystal ball to ensure that the agree- ments provided the parties with the cer- tainty their businesses need while being flexible enough to deal with whatever the future brings. It likely would have been challenging for a larger, more regimented pipeline company to accommodate some of the more custom provisions that were negotiated by the parties in the transpor- tation services agreement. Quesnel: Wolf had acquired Devon's — MEG's former partner — 50-per-cent in- terest in the Access Pipeline System and entered into a long-term transportation services agreement (TSA) with Devon the year prior. As a result, Wolf had to be very mindful to ensure that the MEG TSA was compatible with the Devon TSA, and in particular, that the terms of the MEG TSA would not require Wolf to breach its obli- gations to Devon under the Devon TSA. In that respect, even though Devon did not directly or indirectly participate in the negotiations, it was, nonetheless, another "party" in the room. LEXPERT: What types of regulatory ap- provals were needed for this transaction? Wright: e transaction required Competi- tion Act approval, which was obtained by the end of February 2018 in the form of a No-Action Letter issued by the Competi- tion Bureau. In addition, the parties ob- tained typical normal course regulatory approvals and notifications relating to the transfer of the assets. LEXPERT: What did you learn from this deal that you can apply to the next one? Borden: at each deal has its own unique nuances and you need to tailor both the style of the negotiations — in-person meet- ings versus conference calls versus exchang- ing dras — and the individuals at the negotiating table to the perceived require- ments of each particular deal. Wright: at there are significant opportu- nities for producers and midstream compa- nies to establish long-term mutually benefi- cial relationships. LEXPERT: How would you characterize the tone of the negotiations? Was there a quick agreement on terms or a more drawn-out negotiation? Litton: Notwithstanding the tight timeline, the negotiation was still fairly drawn-out given the underlying complexities. How- ever, the tone of the negotiations was al- most without exception amicable and co- operative. As noted, the teams involved in negotiations know each other quite well and have histories of sitting across the table from one another in other roles and trans- actions, including, in the case of the Wolf and MEG business people, on matters re- lating to their joint ownership of the Access Pipeline prior to this transaction. While there will always be tense moments in ne- gotiations between parties with compet- ing interests, their general familiarity with each other assisted us in working through most of these issues fairly quickly. Quesnel: e negotiations were highly re- spectful and solution-oriented. Both MEG and Wolf appreciated the complexities inherent in their post-closing relationship and worked hard to understand the drivers that were important to one another. As a result, they worked together in a spirit of accommodation with a view to ensuring the long-term success and resiliency of their post-closing relationship. LEXPERT: What was the most memorable or unusual aspect of this deal? Borden: Although every transaction has its nuances, this deal was memorable because of the unique personalities of the individu- als negotiating this transaction, the com- plexity of the "crystal ball" analysis that was required and the tight timeline under which the parties were operating. Quesnel: It was a pleasure working with the business and legal teams for MEG and Wolf. (For a summary and full list of legal advisors, see p. 15)

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