Malone Petroleum Consulting



Oil and Gas Operating Agreements Are Critical & Need Tight Controls

Operating Agreement Control

We were performing a due diligence for an oil and gas acquisition. The client elected to not take the extra time to make copies of the joint operating agreements in order to save time and would not change his mind. Big mistake. One of the services we offer is cruel to us since it is labor intensive; but it is to go through every one of your land files; tag all JOA's; identify them with a well name and property number; and make copies of all your operating agreements which can be later scanned into your Land department system. This can be critical, for instance, as one single item, you need to know what the required AFE dollar limit is for any new, planned workovers since you need to issue an AFE; otherwise, the Non-Operator can refuse to pay the joint interest billing which could cost you over $100,000 - more or less.

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