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.
New Mexico Advance of Well Costs: A Comprehensive Overview and Types Keywords: New Mexico, advance of well costs, oil and gas exploration, drilling operations, capital expenditure, drilling plan, well completion, production phase, cost reimbursement, leaseholder, operator. Description: The New Mexico Advance of Well Costs is a crucial aspect of the oil and gas industry in the state. It refers to the financial arrangement in which a leaseholder or operator borrows funds from a third party to cover the upfront expenses associated with drilling and completing an oil or gas well. The aim is to ensure smooth operations and efficient resource extraction while minimizing financial burdens on leaseholders. 1. Development Well Costs: One type of New Mexico Advance of Well Costs pertains to development wells. These are wells drilled within an existing oil or gas field to access additional hydrocarbon reserves. The advance of well costs for development wells covers expenses such as drilling rig rental, personnel salaries, drilling fluids, well bore casing, cementing, and completion equipment. 2. Exploration Well Costs: Another type focuses on exploration wells, which involve drilling in unexplored or partially explored areas to assess the presence of potentially productive oil or gas reserves. Exploration well costs include expenses related to geophysical surveys, seismic data acquisition and interpretation, lease acquisition, permitting, and drilling operations. 3. Capital Expenditure: New Mexico Advance of Well Costs also encompasses the capital expenditure required for well construction and completion. This includes costs associated with drilling equipment and infrastructure like drilling rigs, wellheads, casing, tubing, completion tools, and artificial lift systems. Capital expenditure helps secure efficient drilling operations and long-term well productivity. 4. Cost Reimbursement: The concept of cost reimbursement is an integral part of New Mexico Advance of Well Costs. After the advancement of funds, the leaseholder or operator is responsible for repaying the financing entity or third party. The reimbursement typically occurs when the well starts producing oil or gas, generating revenues to cover the borrowed capital. This reimbursement process ensures a fair distribution of costs and benefits between involved parties. In conclusion, the New Mexico Advance of Well Costs plays a crucial role in the state's oil and gas industry. It encompasses various types of well costs, including those related to development wells and exploration wells. Capital expenditure for drilling operations and cost reimbursement mechanisms are also part of this financial arrangement. Efficient management of these costs is vital for promoting sustainable oil and gas exploration, development, and production in New Mexico.New Mexico Advance of Well Costs: A Comprehensive Overview and Types Keywords: New Mexico, advance of well costs, oil and gas exploration, drilling operations, capital expenditure, drilling plan, well completion, production phase, cost reimbursement, leaseholder, operator. Description: The New Mexico Advance of Well Costs is a crucial aspect of the oil and gas industry in the state. It refers to the financial arrangement in which a leaseholder or operator borrows funds from a third party to cover the upfront expenses associated with drilling and completing an oil or gas well. The aim is to ensure smooth operations and efficient resource extraction while minimizing financial burdens on leaseholders. 1. Development Well Costs: One type of New Mexico Advance of Well Costs pertains to development wells. These are wells drilled within an existing oil or gas field to access additional hydrocarbon reserves. The advance of well costs for development wells covers expenses such as drilling rig rental, personnel salaries, drilling fluids, well bore casing, cementing, and completion equipment. 2. Exploration Well Costs: Another type focuses on exploration wells, which involve drilling in unexplored or partially explored areas to assess the presence of potentially productive oil or gas reserves. Exploration well costs include expenses related to geophysical surveys, seismic data acquisition and interpretation, lease acquisition, permitting, and drilling operations. 3. Capital Expenditure: New Mexico Advance of Well Costs also encompasses the capital expenditure required for well construction and completion. This includes costs associated with drilling equipment and infrastructure like drilling rigs, wellheads, casing, tubing, completion tools, and artificial lift systems. Capital expenditure helps secure efficient drilling operations and long-term well productivity. 4. Cost Reimbursement: The concept of cost reimbursement is an integral part of New Mexico Advance of Well Costs. After the advancement of funds, the leaseholder or operator is responsible for repaying the financing entity or third party. The reimbursement typically occurs when the well starts producing oil or gas, generating revenues to cover the borrowed capital. This reimbursement process ensures a fair distribution of costs and benefits between involved parties. In conclusion, the New Mexico Advance of Well Costs plays a crucial role in the state's oil and gas industry. It encompasses various types of well costs, including those related to development wells and exploration wells. Capital expenditure for drilling operations and cost reimbursement mechanisms are also part of this financial arrangement. Efficient management of these costs is vital for promoting sustainable oil and gas exploration, development, and production in New Mexico.
