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Credit Risk Retention in Oil & Gas ‘Securitizations’ of Proven, Developed and Producing (PDP) Wells

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The purpose of this White Paper is to provide general guidance to transaction participants and practitioners in their consideration of the application of 17 C.F.R. Part 246, adopted jointly by the Securities and Exchange Commission (“SEC”) and five other federal agencies (the “Agencies”) in October of 2014 (the “CRR Rules”) pursuant to Section 15G of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as added by section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, to a typical issuance of secured notes by a newly formed special purpose vehicle that owns or will own, among other things, a portfolio of proven, developed and producing hydrocarbon wells (a “Structured PDP Well Financing”), as further described below.

The contents of this White Paper are for informational purposes only. This White Paper was prepared by the law firms identified below but is not intended and may not be relied upon as a legal opinion or legal or other professional advice by any of the law firms identified below in connection with any transaction or otherwise. The legal discussions in this White Paper do not reflect the application of our understandings to the facts and circumstances necessary in analyzing any specific transaction and further reflect the views of the law firms identified below on the CRR Rules as currently existing, which are necessarily subject to change in response to future federal legislative, regulatory or judicial action interpreting the CRR Rules and specific guidance provided by the SEC and the other federal agencies responsible for the promulgation of the CRR Rules. This White Paper does not under any circumstance create an attorney-client relationship between the law firms identified below and any recipient of this White Paper. The applicability of the CRR Rules to a Structured PDP Well Financing will depend on the specific facts and circumstances involving the particular transaction.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.