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.
Washington Cost Overruns for Non-Operator's Non-Consent Option refers to a specific provision in the state regulations governing oil and gas operations, particularly in the context of joint ventures or partnerships. This provision outlines the circumstances in which a non-operator who chooses not to participate in a drilling project can be held liable for cost overruns associated with the operation. In Washington, oil and gas exploration and production activities are commonly conducted by joint ventures, where multiple parties pool their resources and expertise to undertake drilling projects. The operator, typically the party with technical expertise and control over operations, initiates and manages the project. Non-operators, on the other hand, are typically investors who contribute capital but do not participate in decision-making or operational activities. The Washington Cost Overruns for Non-Operator's Non-Consent Option comes into play when a non-operator decides not to fund a drilling project or exercise their right to participate in the venture. Under this provision, if the project encounters unexpected cost overruns, the non-operator who did not consent to the project may still be held responsible for a portion of the excess costs. This provision acts as a safeguard to ensure that non-operators bear a proportionate share of the financial risks associated with oil and gas operations. The specific types or scenarios of cost overruns that may trigger the application of this provision can vary. Some possible examples include: 1. Exceeding the original budget: If a drilling project ends up costing more than the initial estimated budget, and a non-operator has chosen not to fund the project, they may be liable for a share of the additional costs. 2. Unforeseen technical difficulties: If the project encounters unexpected technical challenges or complications during drilling, resulting in increased costs, non-operators who did not consent to the project may bear some responsibility for the additional expenses. 3. Regulatory changes or compliance issues: In the event that new regulations are implemented or existing ones change during the course of the drilling project, leading to increased expenses for compliance, non-operators who opted out may be accountable for a portion of these cost increases. It is important for non-operators to carefully review their rights and responsibilities outlined in the partnership or joint venture agreement, as well as the specific provisions relevant to cost overruns for non-operator non-consent options in Washington state regulations. Understanding these provisions will help non-operators make informed decisions about their participation in drilling projects and assess potential financial risks they may face in the event of cost overruns.Washington Cost Overruns for Non-Operator's Non-Consent Option refers to a specific provision in the state regulations governing oil and gas operations, particularly in the context of joint ventures or partnerships. This provision outlines the circumstances in which a non-operator who chooses not to participate in a drilling project can be held liable for cost overruns associated with the operation. In Washington, oil and gas exploration and production activities are commonly conducted by joint ventures, where multiple parties pool their resources and expertise to undertake drilling projects. The operator, typically the party with technical expertise and control over operations, initiates and manages the project. Non-operators, on the other hand, are typically investors who contribute capital but do not participate in decision-making or operational activities. The Washington Cost Overruns for Non-Operator's Non-Consent Option comes into play when a non-operator decides not to fund a drilling project or exercise their right to participate in the venture. Under this provision, if the project encounters unexpected cost overruns, the non-operator who did not consent to the project may still be held responsible for a portion of the excess costs. This provision acts as a safeguard to ensure that non-operators bear a proportionate share of the financial risks associated with oil and gas operations. The specific types or scenarios of cost overruns that may trigger the application of this provision can vary. Some possible examples include: 1. Exceeding the original budget: If a drilling project ends up costing more than the initial estimated budget, and a non-operator has chosen not to fund the project, they may be liable for a share of the additional costs. 2. Unforeseen technical difficulties: If the project encounters unexpected technical challenges or complications during drilling, resulting in increased costs, non-operators who did not consent to the project may bear some responsibility for the additional expenses. 3. Regulatory changes or compliance issues: In the event that new regulations are implemented or existing ones change during the course of the drilling project, leading to increased expenses for compliance, non-operators who opted out may be accountable for a portion of these cost increases. It is important for non-operators to carefully review their rights and responsibilities outlined in the partnership or joint venture agreement, as well as the specific provisions relevant to cost overruns for non-operator non-consent options in Washington state regulations. Understanding these provisions will help non-operators make informed decisions about their participation in drilling projects and assess potential financial risks they may face in the event of cost overruns.
