A farmout agreement is used when the "farmor" agrees to assign acreage to the "farmee" in return for the "farmee" performing specified drilling and testing obligations, with the "farmor" also reserving an interest in the acreage assigned and in the production from the wells drilled by the second company.
Travis Texas Farm out Agreement — Short Form is a legal contract commonly utilized in the oil and gas industry. It outlines the terms and conditions for the transfer of a leaseholder's rights to explore and develop oil and gas properties. This agreement primarily aims to attract potential exploration partners by allowing them to acquire partial or full working interests in an existing lease. In this agreement, the "Armor" (the original leaseholder) grants the "Farmer" (the acquiring party) the right to drill, explore, and develop the leased property in exchange for specific considerations. These considerations may include a cash bonus, a share of the revenues generated from oil or gas production, or a combination of both. The agreement also sets out the timeframe for completing exploration activities and any obligations or restrictions imposed on the Farmer. Keywords: Travis Texas, Farm out Agreement, Short Form, leaseholder, oil and gas industry, transfer of rights, explore, develop, working interests, armor, farmer, drilled, bonus, revenues, production, timeframe, exploration activities, obligations, restrictions. Different types of Travis Texas Farm out Agreement — Short Form may include variations depending on the specific requirements and objectives of the parties involved. Examples can be: 1. Cash Bonus Agreement: This type of Farm out Agreement primarily involves the Farmer providing a cash bonus to the Armor in exchange for acquiring working interests in the leased property. 2. Production Sharing Agreement: In this scenario, the Farmer agrees to share a percentage of the revenues generated from oil or gas production with the Armor in return for the rights to explore and develop the leased property. 3. Risk Burden Agreement: This type of agreement specifies that the Farmer assumes a greater portion of the financial risk associated with the exploration and development activities, while the Armor retains a smaller working interest but is also entitled to a share in the profits. 4. Term Agreement: A Farm out Agreement with a fixed term, wherein the Farmer is granted exclusive rights to explore and develop the leased property for a specified period. After the term expires, the Farmer may have the option to extend the agreement or return the working interests to the Armor. Each version of the Travis Texas Farm out Agreement — Short Form may have its own unique provisions and terms to address specific circumstances and the needs of the parties involved. It is crucial for both parties to thoroughly review and understand the terms before signing the agreement to ensure their rights and responsibilities are adequately protected.
