Oil And Gas Operating Agreement

Posted on 13. Dec, 2020 by in Uncategorized

David Sweeney is an oil and gas lawyer with energy experience in more than 30 countries. He has worked for his clients as an external advisor, in-house legal officer, compliance officer, feldlandmann and trade negotiator, and is an author and speaker on oil and gas issues. Its activities include mergers and acquisitions, joint enterprise agreements, enterprise and unit agreements, farm and joint venture operations, equity and debt financing, corporate restructuring, anti-corruption implementation and training, drilling and service contracts, rig sharing agreements, collection and transportation contracts, engineering and procurement and procurement contracts. Mr. Sweeney is a member of the Executive Committee of the Institute for Energy Law (IEL) and, since then, chaired the IEL Young Energy Professionals Committee and the Association of International Petroleum`Negotiators` Young Negotiators Committee. He is a partner in the office of K-L Gates LLP in Houston, Texas. The operator is responsible for the day-to-day management and operation of the field. This is usually a single party with the greatest interest in the agreement. However, it is not uncommon for a designated operator to have a minority in the agreement. Although the operator is entitled to full control over the operation, it is generally not paid. The operator`s main task is to carefully plan activities to increase the profitability of operations. However, it is not responsible for production or revenue losses resulting from its decisions, except in cases of gross negligence and/or intentional misconduct.

What are the rights and obligations of these tenants in their exploration and development activities? In Texas, any tenant can drill and produce oil and gas without the consent of other tenants. [4] Patrick H. Martin and Bruce M. Kramer, Williams and Meyers, Oil and Gas Law Abridged Fifth Edition, No. 503 (LexisNexis Matthew Bender 2013). However, the total risk of a dry hole is borne by this decision-makers, who also took into account the share of the production of the other tenants, net of its proportionate share of the costs of drilling, producing and operating the property. Unfortunately, the common law principles are not sufficiently clear about the costs that joint ventures can recover from non-operational roommates. [5] Allen Cummings, The Joint Operating Agreement – The Basics, The State Bar of Texas Oil, Gas and Energy Resources 101, Chapter 4, October, 2012, Houston, Texas A commentator surprisingly called it the “Cotenant Problem.” [6] Id. A joint enterprise agreement can solve this “co-tenant” problem and provide the parties with a contractual basis for understanding their rights and obligations.

[7] Id. Common enterprise agreements are popular because they offer a way to spread the risk of exploration and drilling.

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