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.
North Dakota Advance of Well Costs, also known as North Dakota AWC, is a financing option provided to oil and gas operators in the state of North Dakota to assist with the upfront expenses associated with drilling and completing oil and gas wells. This funding mechanism helps operators get the necessary capital to begin operations without having to rely solely on their own finances. The North Dakota AWC program aims to support the development of the state's energy industry by providing timely financial assistance directly to qualified operators. These funds are typically used to cover expenses such as drilling and completion costs, surface equipment, casing, cementing, and other necessary well-related expenses. This financing option is specifically designed for operators who have access to proven reserves or acreage in the state of North Dakota. It allows them to secure financing based on the estimated value of their reserves, thus minimizing the risks associated with drilling and exploration activities. North Dakota AWC can help operators overcome the financial barrier that often prevents them from pursuing drilling projects, especially in the absence of a strong credit history or adequate collateral. There are different types of North Dakota Advance of Well Costs available based on the specific needs of the operators: 1. Well-Specific AWC: This type of financing is granted for a specific well project, covering all the costs associated with drilling, completion, and initial production. The amount disbursed is usually determined based on the projected reserves and estimated financial viability of the well. 2. Programmatic AWC: This form of financing provides a line of credit to operators, allowing them to access funds for multiple well projects. The operator can draw from this line of credit as needed, up to a predetermined maximum limit. Programmatic AWC provides greater flexibility and ongoing financial support for operators engaged in multiple drilling projects. 3. Development AWC: This type of financing is specifically targeted towards operators engaged in development drilling. It assists in covering the costs of multiple well projects within a specific development plan, such as drilling within a designated field or lease area. In summary, North Dakota Advance of Well Costs is a crucial financial tool that provides operators in North Dakota with the necessary funds to kick-start oil and gas drilling projects. By eliminating the upfront financial burden, it encourages exploration and production activities in the state while enabling operators to leverage their proven reserves to secure timely funding.
