Changes

==Farm-outs and farm-ins (Well trades)==

==Farm-outs and farm-ins (Well trades)==

When the owner (''farmor'') of an oil and gas working interest agrees to assign an interest in a lease (called the ''farm-out area'') to another party (''farmee'') in consideration of the farmee drilling a well or wells (''farm-out wells'') on the farm-out area, the farmor is said to have made a farm-out and the farmee has made a ''farm-in.'' Sometimes the farmee may be required to do more than drill a well, including performing geological and seismic studies or paying a cash consideration for past costs incurred by the farmor.

When the owner (''farmor'') of an oil and gas working interest agrees to assign an interest in a lease (called the ''farm-out area'') to another party (''farmee'') in consideration of the farmee [[drilling a well]] or wells (''farm-out wells'') on the farm-out area, the farmor is said to have made a farm-out and the farmee has made a ''farm-in.'' Sometimes the farmee may be required to do more than drill a well, including performing geological and seismic studies or paying a cash consideration for past costs incurred by the farmor.

These farm-out agreements are usually accomplished in a nonrecordable form of letter agreement that typically contains provisions relating to the following:

These farm-out agreements are usually accomplished in a nonrecordable form of letter agreement that typically contains provisions relating to the following:

# The location, well objective depth, commencement date, and geological requirements of the farm-out wells

# The location, well objective depth, commencement date, and geological requirements of the farm-out wells

# Substitute or lost hole well provisions in the event the initial farm-out wells are lost because of [[drilling problems]]

# Substitute or lost hole well provisions in the event the initial farm-out wells are lost because of [[drilling problems]]

# Earning requirements of the various possibilities, such as a dry hole, a producer, a producer at any depth, more than one well, continuous drilling, and so on

# Earning requirements of the various possibilities, such as a [[dry hole]], a producer, a producer at any depth, more than one well, continuous drilling, and so on

# Rights retained by the farmor, including working interest, overriding royalty, net profits, or combinations of these interests

# Rights retained by the farmor, including working interest, overriding royalty, net profits, or combinations of these interests

# Tender of wells or leases before abandonment and/or surrender

# Tender of wells or leases before abandonment and/or surrender

===Well support agreements===

===Well support agreements===

The three types of well support agreements are dry hole contribution, bottom hole contribution, and acreage contribution.

The three types of well support agreements are dry hole contribution, bottom hole contribution, and acreage contribution.

# A ''dry hole contribution'' is used by drilling parties to obtain money contributions from parties whose working interest leases located near the well to be supported will benefit from the drilling results. Dry hole contributions are paid (usually an agreed upon amount based on footage drilled) only in the event that the drilling results in a dry hole drilled to the depth specified. The party paying the contribution is entitled to all of the well data.

# A ''dry hole contribution'' is used by drilling parties to obtain money contributions from parties whose working interest leases located near the well to be supported will benefit from the drilling results. Dry hole contributions are paid (usually an agreed upon amount based on footage drilled) only in the event that the drilling results in a [[dry hole]] drilled to the depth specified. The party paying the contribution is entitled to all of the well data.

# A ''bottom hole contribution'' is similar to a dry hole contribution except that the agreed upon money contribution is paid whether the well is completed as a producer or abandoned as a dry hole.

# A ''bottom hole contribution'' is similar to a dry hole contribution except that the agreed upon money contribution is paid whether the well is completed as a producer or abandoned as a dry hole.

# An ''acreage contribution'' is similar to a dry or bottom hole contribution except that the nondrilling party agrees to contribute all or part of the leases located near the support well rather than money.

# An ''acreage contribution'' is similar to a dry or bottom hole contribution except that the nondrilling party agrees to contribute all or part of the leases located near the support well rather than money.

==See also==

==See also==

* [[Functions of a petroleum landman]]

* [[Functions of a petroleum landman]]

* [[Determining owners of oil and gas interests, and methods of conveyance]]

* [[Determining owners of oil and gas interests, and methods of conveyance]]

* [[Nature of the oil and gas lease]]

* [[Nature of the oil and gas lease]]

[[Category:Land and leasing]]

[[Category:Land and leasing]]