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The Strategic Importance of Farm Outs – Part 3

The previous articles in this series* highlighted the strategic reasons for farm out transactions and some common terms found in farm out agreements.  This article looks in more detail at some of the fundamental legal and contractual issues that should be considered when drafting and negotiating farm out agreements. [* by Richard Metcalf and Vivek Katyal of Norton Rose*, the international law firm]

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The Strategic Importance of Farm Outs – Part 2

Farm out agreements are amongst the most common and strategically important agreements in oil and gas.  For the explorer they can represent an opportunity to create value from a promising prospect, for others they may play a critical role in portfolio optimisation.

There are many different types of farm out agreement but perhaps the most common covers the exchange of an interest in a licence or contract for the assumption of an obligation.  This almost always happens at the exploration stage and the obligation assumed is usually a commitment to the government to shoot seismic or to drill a well.

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The Strategic Importance of Farm Outs – Part 1

For small and big oil companies alike, farm out deals play a significant role in the oil and gas business.  For some small companies farm outs present an opportunity to add value to an exciting exploration prospect.  For larger companies, these deals play a critical role in portfolio management.

Whatever your perspective, farm out agreements are amongst the most common in oil and gas, coming second only to granting instruments.  All investors and companies will want to make sure they understand how these agreements work.

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