LEGAL CONSIDERATIONS AND NEGOTIATION OF JOINT EXPLORATION AGREEMENTS

Abstract

In order to understand the basic elements of a joint exploration agreement, comparisons must be drawn with existing types of legal relationships. A joint exploration agreement, whether formed de novo or created by farming-out, is analogous to a partnership. The analogy to a partnership therefore, explains a number of standard provisions in a joint exploration agreement or farm-out, which though standard and familiar, are there for purposes which are not altogether obvious and have greater flexibility in their framing and potential for innovation to fit specific commercial circumstances. This leads to an examination of the wide range of business relationships, which fall under the general description of a farm-out. Specific types of documents are needed to effect the legal relationship of the parties. Specific provisions of farm-out agreements and operating agreements must be examined to highlight areas for particular attention in negotiations.