GUYANA: OIL: Small companies often farm-out acreage to raise capital – By OilNOW

Exxon Drillship in Stabroek Block Guyana

GUYANA: OIL: – By OilNOW – October 18, 2018

As interest mounts about the nature of farm-in agreements in South America’s newest oil and gas hotspot – Guyana – OilNOW takes a look this week at what the term means, why it is used and to what extent do companies enter such deals in the petroleum industry.

A farm-out agreement operates as a type of sale and purchase agreement under which a seller (the “farmor”) agrees to transfer part (but not all) of its interest in an upstream asset to the buyer (the “farmee”), in exchange for that buyer agreeing to undertake (or fund) work obligations such as acquiring seismic data or drilling wells in respect of that asset.             

In the context of the oil and gas industry, the upstream “asset” being transferred is usually an interest in a license, production sharing contract, or other concession, granted by a government to a company to explore for and produce oil and gas.

READ MORE: https://oilnow.gy/featured/small-companies-often-farm-out-acreage-to-raise-capital/

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Comments

  • kamtanblog  On October 22, 2020 at 4:47 am

    Very complex issues here.
    Reads DAVID V GOLIATH scenario !
    Where giant wins but no draws with government as referee ! With “land” being
    used as collateral to increase capital/cash
    flow….open to abuse/corruption….with pot of black gold at end of rainbow !
    Am neither economist or oil guru but
    can smell rotting fish. Corruption ?

    Land and oil belongs to the people
    with government the regulator on its
    distribution/use age.
    Joint development of newly discovered
    wealth must remain 50/50 public/private
    parthnerships !
    Govt to regulate
    Private to speculate

    Transparency and accountability way forward.
    No ifs or buts

    Kamtan uk-ex-EU

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