This form provides that when Operator, in good faith, believes or determines that the actual costs for any Drilling, Reworking, Sidetracking, Deepening, or Plugging Back operation conducted under this Agreement will exceed a designated of the costs estimated for the operation on the approved AFE, the Operator will give prompt notice by telephone to the other Parties participating in the operation, as well as delivering a supplemental AFE estimating the costs necessary to complete the operation. Each Party receiving the supplemental AFE shall have forty-eight from receipt of the notice to elect to approve Operators recommendation or propose an alternative operation.
Delaware Cost Overruns for Non-Operator's Non-Consent Option is a concept that pertains to the oil and gas industry, specifically within the framework of joint operating agreements (Jobs). This arrangement allows multiple parties, often referred to as co-owners or working interest owners, to collaborate on exploration and production activities in a specific oil or gas lease. In this scenario, the non-operator's non-consent option comes into play when a co-owner decides not to participate in a proposed project or well development. When a non-operator decides to exercise their non-consent option, they may face cost overruns associated with the project due to their decision not to participate. These cost overruns occur when the project's expenses exceed the originally estimated budget, and the non-operator may be liable to cover their proportionate share of these additional costs. These cost overruns can stem from various factors, such as unforeseen operational difficulties, unexpected equipment or material expenses, regulatory or environmental requirements, or changes in market conditions. There are different types of Delaware Cost Overruns for Non-Operator's Non-Consent Option, including: 1. Drilling and Completion Cost Overruns: These cost overruns arise if the actual costs of drilling and completing a well surpass the initial budget. Factors contributing to these cost overruns can include unforeseen geological complexities, difficulties in well bore stability, or unexpected complications during the drilling and completion process. 2. Operation and Maintenance Cost Overruns: After drilling and completion, ongoing operation and maintenance activities could also incur cost overruns. These expenses include regular maintenance, repairs, and necessary upgrades to ensure safe and efficient production. Changes in running costs, such as increases in labor expenses or regulatory compliance requirements, can contribute to these overruns. 3. Infrastructure and Facilities Cost Overruns: In some instances, the establishment or improvement of infrastructure and facilities may be necessary to support the project's operations. If the actual costs for developing pipelines, storage facilities, or surface equipment exceed the initial estimates, the non-operator may be obligated to cover their proportionate share of these cost overruns. It is important for co-owners to carefully evaluate their options and the potential for cost overruns before exercising the non-operator's non-consent option. Understanding the specific provisions outlined in the JOB and seeking professional legal and financial advice can help mitigate the risks associated with cost overruns and ensure that all parties are aligned on their responsibilities and obligations. In summary, the Delaware Cost Overruns for Non-Operator's Non-Consent Option refers to the liability of a non-operator in a joint operating agreement to bear the proportionate share of additional project costs when they choose not to participate. These cost overruns can occur during drilling, completion, operation and maintenance, or infrastructure development stages of oil and gas projects. Co-owners should thoroughly understand the potential cost implications and seek expert advice to make informed decisions within the framework of their joint operating agreement.Delaware Cost Overruns for Non-Operator's Non-Consent Option is a concept that pertains to the oil and gas industry, specifically within the framework of joint operating agreements (Jobs). This arrangement allows multiple parties, often referred to as co-owners or working interest owners, to collaborate on exploration and production activities in a specific oil or gas lease. In this scenario, the non-operator's non-consent option comes into play when a co-owner decides not to participate in a proposed project or well development. When a non-operator decides to exercise their non-consent option, they may face cost overruns associated with the project due to their decision not to participate. These cost overruns occur when the project's expenses exceed the originally estimated budget, and the non-operator may be liable to cover their proportionate share of these additional costs. These cost overruns can stem from various factors, such as unforeseen operational difficulties, unexpected equipment or material expenses, regulatory or environmental requirements, or changes in market conditions. There are different types of Delaware Cost Overruns for Non-Operator's Non-Consent Option, including: 1. Drilling and Completion Cost Overruns: These cost overruns arise if the actual costs of drilling and completing a well surpass the initial budget. Factors contributing to these cost overruns can include unforeseen geological complexities, difficulties in well bore stability, or unexpected complications during the drilling and completion process. 2. Operation and Maintenance Cost Overruns: After drilling and completion, ongoing operation and maintenance activities could also incur cost overruns. These expenses include regular maintenance, repairs, and necessary upgrades to ensure safe and efficient production. Changes in running costs, such as increases in labor expenses or regulatory compliance requirements, can contribute to these overruns. 3. Infrastructure and Facilities Cost Overruns: In some instances, the establishment or improvement of infrastructure and facilities may be necessary to support the project's operations. If the actual costs for developing pipelines, storage facilities, or surface equipment exceed the initial estimates, the non-operator may be obligated to cover their proportionate share of these cost overruns. It is important for co-owners to carefully evaluate their options and the potential for cost overruns before exercising the non-operator's non-consent option. Understanding the specific provisions outlined in the JOB and seeking professional legal and financial advice can help mitigate the risks associated with cost overruns and ensure that all parties are aligned on their responsibilities and obligations. In summary, the Delaware Cost Overruns for Non-Operator's Non-Consent Option refers to the liability of a non-operator in a joint operating agreement to bear the proportionate share of additional project costs when they choose not to participate. These cost overruns can occur during drilling, completion, operation and maintenance, or infrastructure development stages of oil and gas projects. Co-owners should thoroughly understand the potential cost implications and seek expert advice to make informed decisions within the framework of their joint operating agreement.
