A farmout agreement is used when the "farmor" agrees to assign acreage to the "farmee" in return for the "farmee" performing specified drilling and testing obligations, with the "farmor" also reserving an interest in the acreage assigned and in the production from the wells drilled by the second company.
The Harris Texas Farm out Agreement Providing for Single Well with Dry Hole Earning an Assignment is a legally binding contract between a landowner (the armor) and an oil and gas company (the farmer) that outlines the terms and conditions for the exploration and development of oil and gas resources on a specific tract of land in Harris County, Texas. In this particular agreement, the farmer has the option to drill a single well on the designated property, and if it turns out to be a dry hole (unproductive well), they will still earn an assignment of a working interest in other productive wells on the same property or in the surrounding area. This type of agreement is commonly used in the oil and gas industry as a risk-sharing arrangement, where the farmer assumes the expenses and operational responsibilities of drilling and testing the well, while the armor retains ownership of the land. The farmer's objective is to discover and produce oil and gas resources, and in return, they offer the armor a percentage of the revenues generated from the production. The agreement typically includes various key elements such as: 1. Parties Involved: Clearly identifies the parties to the agreement, including their names, addresses, and legal representation. 2. Description of Property: Provides a detailed description of the land or property subject to the agreement, including its boundaries, area, and legal description based on surveys and land records. 3. Single Well Provision: Defines the farmer's exclusive right to drill a single well for exploration and production purposes within a specified timeframe. 4. Dry Hole Provision: Specifies the procedures and consequences if the well turns out to be a dry hole, including the farmer's obligations to reimburse the armor for a portion of the drilling costs and the farmer's entitlement to an assignment of working interest in other productive wells. 5. Assignment of Interest: Outlines the terms and conditions under which the farmer, in the event of a dry hole, will earn a working interest in other productive wells on the property or in nearby areas. 6. Earnings and Revenues: Details the farmer's obligation to pay a specified percentage of the net revenues generated from the production of oil and gas to the armor, commonly referred to as a royalty interest. 7. Termination and Renewal: States the conditions under which the agreement can be terminated or renewed, including any stipulations for extension periods or renegotiation. It is important to note that variations of the Harris Texas Farm out Agreement Providing for Single Well with Dry Hole Earning an Assignment may exist, as specific terms and conditions can be negotiated and customized to suit the preferences and interests of both parties involved.The Harris Texas Farm out Agreement Providing for Single Well with Dry Hole Earning an Assignment is a legally binding contract between a landowner (the armor) and an oil and gas company (the farmer) that outlines the terms and conditions for the exploration and development of oil and gas resources on a specific tract of land in Harris County, Texas. In this particular agreement, the farmer has the option to drill a single well on the designated property, and if it turns out to be a dry hole (unproductive well), they will still earn an assignment of a working interest in other productive wells on the same property or in the surrounding area. This type of agreement is commonly used in the oil and gas industry as a risk-sharing arrangement, where the farmer assumes the expenses and operational responsibilities of drilling and testing the well, while the armor retains ownership of the land. The farmer's objective is to discover and produce oil and gas resources, and in return, they offer the armor a percentage of the revenues generated from the production. The agreement typically includes various key elements such as: 1. Parties Involved: Clearly identifies the parties to the agreement, including their names, addresses, and legal representation. 2. Description of Property: Provides a detailed description of the land or property subject to the agreement, including its boundaries, area, and legal description based on surveys and land records. 3. Single Well Provision: Defines the farmer's exclusive right to drill a single well for exploration and production purposes within a specified timeframe. 4. Dry Hole Provision: Specifies the procedures and consequences if the well turns out to be a dry hole, including the farmer's obligations to reimburse the armor for a portion of the drilling costs and the farmer's entitlement to an assignment of working interest in other productive wells. 5. Assignment of Interest: Outlines the terms and conditions under which the farmer, in the event of a dry hole, will earn a working interest in other productive wells on the property or in nearby areas. 6. Earnings and Revenues: Details the farmer's obligation to pay a specified percentage of the net revenues generated from the production of oil and gas to the armor, commonly referred to as a royalty interest. 7. Termination and Renewal: States the conditions under which the agreement can be terminated or renewed, including any stipulations for extension periods or renegotiation. It is important to note that variations of the Harris Texas Farm out Agreement Providing for Single Well with Dry Hole Earning an Assignment may exist, as specific terms and conditions can be negotiated and customized to suit the preferences and interests of both parties involved.
