The Anatomy and Preparation of OCS Farmout Agreements

Authors

John S. Lowe, Southern Methodist University, Dedman School of LawFollow

Abstract

Oil and gas farmout agreements are important devices in spreading the risks of oil and gas exploration and development on the Outer Continental Shelf, as well as in onshore operations. In fact, because both the costs and risks (as well as the rewards) of offshore development are greater than those usually associated with onshore operations, oil and gas farmout agreements may play a more important role in operations on the Outer Continental Shelf than in onshore operations. The structure of an Outer Continental Shelf farmout agreement does not differ substantially from that of its onshore counterpart. The function of farmout agreements is essentially the same whatever the environment in which they are used. Thus, there are relatively few essential issues that determine the basic structure of the farmout agreement. The author has discussed these issues at length elsewhere. In this paper he will simply summarize the points made in that more extensive paper and point out some interesting characteristics of OCS farmout agreements.

Publication Title

Oil and Gas Operations in Federal and Coastal Waters

Document Type

Article

Keywords

farmout agreements - Outer Continental Shelf, OCS, oil and gas, offshore development, offshore drilling

Recommended Citation

John Lowe, The Anatomy and Preparation of OCS Farmout Agreements in OIL AND GAS OPERATIONS IN FEDERAL COASTAL WATERS (Rocky Mountain Mineral L. Found. May 1989)