This form is one which grants the Operator the right to request and receive from each Non-Operator payment in advance of its respective share of (i) the dry hole cost or (at Operator’s election) the completed well cost for the Initial Well to be drilled.
Michigan Advance of Well Costs refers to a financial assistance program specifically designed for oil and gas operators in the state of Michigan. This program aids in the initial upfront costs associated with drilling and developing wells for oil and gas exploration. It provides operators with the necessary funds to cover the expenses incurred during the early stages of well completion and includes various types based on the specific requirements and circumstances. One type of Michigan Advance of Well Costs is the Initial Drilling Advance. This type of advance covers the expenses incurred during the drilling phase, including the cost of equipment, drilling rig services, and other necessary supplies. It ensures that operators can commence drilling operations without delays or financial constraints. Another type is the Completion and Fracture Advance, which assists operators in covering the costs related to the completion and fracture stimulation of drilled wells. This advance may include expenses such as hydraulic fracturing services, cementing, perforation, and other completion-related activities. Additionally, the Michigan Advance of Well Costs program offers a Production Equipment Advance. This type of advance provides financial aid for purchasing and installing production equipment necessary for the extraction and transportation of oil and gas. It includes items such as pumps, storage tanks, separators, and pipelines. Operators can also apply for a Plugging and Abandonment Advance through the Michigan Advance of Well Costs program. This advance covers the costs associated with permanently sealing and abandoning non-producing or exhausted wells. These expenses might include well bore cleaning, filling with cement, and proper wellhead sealing to ensure environmental safety. To obtain the advance, operators should complete an application process and meet certain eligibility criteria. This may involve submitting a detailed budget and drilling plan, providing proof of financial soundness, and complying with regulatory requirements set by the Michigan Department of Environment, Great Lakes, and Energy (EAGLE). The Michigan Advance of Well Costs program acts as an important financial support mechanism for oil and gas operators in Michigan. It enables them to overcome the initial financial burden of drilling, completing, and maintaining wells, facilitating the development of Michigan's energy resources. By offering these advances, the program plays a crucial role in stimulating the oil and gas industry's growth and promoting responsible and efficient well development practices.
