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.
The Kings New York Cost Overruns for Non-Operator's Non-Consent Option is a provision in oil and gas leases that aims to address the potential cost overruns associated with drilling operations. This option typically applies to situations where the non-operating interest owner (also known as the non-operator or royalty owner) chooses not to participate in the drilling or development of a well. In such cases, the operator assumes all the costs and risks associated with the drilling project. However, if the actual costs exceed the initial estimates, the non-operator may be obligated to pay their proportionate share of the cost overruns, as specified in the lease agreement. This provision is crucial for maintaining fairness and balance between the operator and non-operator in a joint venture. It helps prevent the non-operator from benefiting financially without bearing any of the potential risks associated with cost overruns. There are different types of Kings New York Cost Overruns for Non-Operator's Non-Consent Options that can be named, such as: 1. Carried Interests: In some cases, the non-operator may choose to be carried by the operator, meaning they do not have to contribute any funds towards the cost overruns. Instead, the operator covers all the additional expenses and recoups the non-operator's share from future production revenue, along with interest. 2. Penalty or Loss of Interest: Another possible option is for the non-operator to pay a penalty or forfeit a portion of their interest in the well when cost overruns occur. This penalty can be predetermined in the lease agreement or determined based on negotiations between the operator and non-operator. 3. Reimbursement Arrangements: Some leases may include provisions that require the non-operator to fully or partially reimburse the operator for any cost overruns encountered. The reimbursement may be paid upfront or deducted from future revenue generated from the well. It's important for both parties to thoroughly evaluate their options and negotiate the terms of the non-operator's non-consent option regarding cost overruns. This allows for a fair and balanced agreement that accounts for potential cost uncertainties and protects the interests of both the operator and the non-operator in Kings New York.The Kings New York Cost Overruns for Non-Operator's Non-Consent Option is a provision in oil and gas leases that aims to address the potential cost overruns associated with drilling operations. This option typically applies to situations where the non-operating interest owner (also known as the non-operator or royalty owner) chooses not to participate in the drilling or development of a well. In such cases, the operator assumes all the costs and risks associated with the drilling project. However, if the actual costs exceed the initial estimates, the non-operator may be obligated to pay their proportionate share of the cost overruns, as specified in the lease agreement. This provision is crucial for maintaining fairness and balance between the operator and non-operator in a joint venture. It helps prevent the non-operator from benefiting financially without bearing any of the potential risks associated with cost overruns. There are different types of Kings New York Cost Overruns for Non-Operator's Non-Consent Options that can be named, such as: 1. Carried Interests: In some cases, the non-operator may choose to be carried by the operator, meaning they do not have to contribute any funds towards the cost overruns. Instead, the operator covers all the additional expenses and recoups the non-operator's share from future production revenue, along with interest. 2. Penalty or Loss of Interest: Another possible option is for the non-operator to pay a penalty or forfeit a portion of their interest in the well when cost overruns occur. This penalty can be predetermined in the lease agreement or determined based on negotiations between the operator and non-operator. 3. Reimbursement Arrangements: Some leases may include provisions that require the non-operator to fully or partially reimburse the operator for any cost overruns encountered. The reimbursement may be paid upfront or deducted from future revenue generated from the well. It's important for both parties to thoroughly evaluate their options and negotiate the terms of the non-operator's non-consent option regarding cost overruns. This allows for a fair and balanced agreement that accounts for potential cost uncertainties and protects the interests of both the operator and the non-operator in Kings New York.
