UBS structures a volumetric production payment

In February 2007 an independent oil producer and strategic client of UBS needed to refinance existing debt facilities in order to fund a key acquisition. With the potential acquisition deal's sunset date looming in four weeks, a swift solution was needed.

It notified UBS, which recommended a volumetric production payment (VPP). A typical VPP structure gives the VPP purchaser - in this case UBS - the right to acquire "term overriding royalty interest" in specified oil properties. In this case the

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