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Book Details
Abstract
This third edition of the leading work on joint operating agreements (JOAs) provides a pragmatic examination of the provisions of a typical JOA in the order that they appear, with a particular focus on the critical issues of scope, the operator’s role, joint and exclusive operations, default, transfers and decommissioning. There is also practical analysis of the key issues which apply to the operation of any JOA and the positions which are taken in the various leading industry model form contracts. The perspectives of the operator and non-operator are addressed, along with a consideration of the domestic and international standards which will apply to a petroleum project.
The third edition highlights changes in the JOA world since the second edition and includes three new chapters (with increased focus on incorporated joint venture structures, contracting and forfeiture of interests) and four new appendices (addressing model form JOAs, joint study and bid agreements, the collateralisation of JOAs and the content of JOAs for unconventional petroleum developments).
Author Peter Roberts is the managing partner of the London office of leading US oil and gas law firm Andrews Kurth LLP. He is also the general editor of the Association of International Petroleum Negotiators’ Journal of World Energy Law & Business.
Joint Operating Agreements, Third Edition: A Practical Guide is an essential addition to the library of any lawyers, commercial managers, advisers, engineers or financiers who are engaged in the development of petroleum exploration and production projects worldwide.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Front Cover | 1 | ||
| Title | 2 | ||
| Copyright | 3 | ||
| Table of contents | 4 | ||
| Introduction | 8 | ||
| Glossary | 10 | ||
| 1. First principles | 14 | ||
| 1.1 Mineral laws and concessions | 14 | ||
| 1.2 The role of the JOA | 16 | ||
| 1.3 Hybrid concession/JOA structures | 19 | ||
| 1.4 The logic for a joint venture | 20 | ||
| 1.5 Model form contracts | 21 | ||
| 1.6 North American leasehold interests | 23 | ||
| 1.7 Evolution of the JOA | 24 | ||
| 1.8 The JOA’s economic profile | 26 | ||
| 2. Incorporated joint ventures | 28 | ||
| 2.1 Introducing the incorporated joint venture | 28 | ||
| 2.2 The role of the shareholder agreement | 29 | ||
| 2.3 Incorporated and unincorporated joint ventures together | 33 | ||
| 3. Duration | 36 | ||
| 3.1 Commencement | 36 | ||
| 3.2 Term and termination | 38 | ||
| 3.3 Surviving provisions | 39 | ||
| 3.4 Pre-JOA arrangements | 41 | ||
| 3.5 Chronology of the JOA | 43 | ||
| 4. Parties and participating interests | 46 | ||
| 4.1 The parties | 46 | ||
| 4.2 Affiliates | 48 | ||
| 4.3 Participating interests | 48 | ||
| 4.4 Joint property | 50 | ||
| 4.5 State participation | 51 | ||
| 4.6 Carried interests | 54 | ||
| 4.7 Illustrative agreements | 56 | ||
| 5. Scope | 58 | ||
| 5.1 Joint operations | 58 | ||
| 5.2 Excluded activities | 63 | ||
| 5.3 Expanding the scope | 65 | ||
| 5.4 Definition of the scope | 67 | ||
| 5.5 Modification of the scope | 68 | ||
| 6. Exclusive operations | 70 | ||
| 6.1 Defining exclusive operations | 70 | ||
| 6.2 Exclusive operations mechanics | 74 | ||
| 6.3 Buy-back rights | 80 | ||
| 6.4 Excluding exclusive operations | 81 | ||
| 7. The operator | 84 | ||
| 7.1 The operator’s advantage | 84 | ||
| 7.2 Selection of the operator | 85 | ||
| 7.3 The role of the operator | 87 | ||
| 7.4 The locus of the operator | 91 | ||
| 7.5 Removal of the operator | 93 | ||
| 7.6 Hybrid operators | 96 | ||
| 8. The operating committee | 102 | ||
| 8.1 The role of the operating committee | 102 | ||
| 8.2 Operating committee mechanics | 104 | ||
| 8.3 Subcommittees | 107 | ||
| 8.4 Voting control | 107 | ||
| 9. Budgets, cash calls and payments | 114 | ||
| 9.1 The funding cycle | 114 | ||
| 9.2 Work programmes and budgets | 114 | ||
| 9.3 Authorities for expenditure | 119 | ||
| 9.4 Cashcalls and invoice requests | 121 | ||
| 9.5 Payment obligations | 124 | ||
| 9.6 Dealing with default | 126 | ||
| 10. Contracting | 128 | ||
| 10.1 Procurement options | 128 | ||
| 10.2 Third-party contracts | 129 | ||
| 10.3 Affiliate contracts | 130 | ||
| 10.4 Federal contracts | 133 | ||
| 10.5 Contributions in kind | 134 | ||
| 10.6 Awarding of contracts | 135 | ||
| 11. Petroleum allocation, lifting and disposal | 138 | ||
| 11.1 Petroleum allocation | 138 | ||
| 11.2 Petroleum lifting | 140 | ||
| 11.3 Petroleum disposal | 145 | ||
| 11.4 Production-sharing contract allocation | 146 | ||
| 12. Transfers | 148 | ||
| 12.1 Transfers under applicable law | 148 | ||
| 12.2 Transfer mechanics in the JOA | 149 | ||
| 12.3 Incomplete transfers | 156 | ||
| 12.4 Pre-emption rights | 157 | ||
| 12.5 Change of control | 161 | ||
| 12.6 Affiliate transfers | 164 | ||
| 13. Withdrawal and surrender | 166 | ||
| 13.1 The withdrawal principle | 166 | ||
| 13.2 Reconciling withdrawal with the concession | 168 | ||
| 13.3 The mechanics of withdrawal | 170 | ||
| 13.4 Withdrawal and continuing costs | 172 | ||
| 13.5 Partial withdrawal | 174 | ||
| 13.6 The consequences of withdrawal | 175 | ||
| 13.7 Use of the withdrawal mechanism | 177 | ||
| 14. Liabilities | 180 | ||
| 14.1 The operator’s liability to the parties | 180 | ||
| 14.2 Liability allocation between the parties | 186 | ||
| 14.3 Liability for exclusive operations | 187 | ||
| 14.4 Third-party liabilities | 187 | ||
| 14.5 Liabilities and insurance | 189 | ||
| 14.6 General liability | 190 | ||
| 15. Decommissioning | 194 | ||
| 15.1 The decommissioning phase | 194 | ||
| 15.2 The regulatory regime | 196 | ||
| 15.3 Collateral support for decommissioning costs | 198 | ||
| 15.4 Decommissioning and the JOA | 200 | ||
| 15.5 Decommissioning on the UK continental shelf | 203 | ||
| 16. Default | 208 | ||
| 16.1 Consequence of default | 208 | ||
| 16.2 Definition of default | 210 | ||
| 16.3 Reaction to default | 213 | ||
| 16.4 Remedies for default | 214 | ||
| 16.5 Mortgage and lien protection | 219 | ||
| 16.6 Interest sales | 221 | ||
| 17. Forfeiture | 224 | ||
| 17.1 Meaning of forfeiture | 224 | ||
| 17.2 Forfeiture as a penalty | 226 | ||
| 17.3 Relief against forfeiture | 228 | ||
| 17.4 Anti-deprivation | 230 | ||
| 17.5 Forfeiture of the concession | 230 | ||
| 17.6 Forfeiture by any other name | 231 | ||
| 17.7 Withering interest forfeiture | 233 | ||
| 18. Dispute resolution | 240 | ||
| 18.1 Dispute resolution principles | 240 | ||
| 18.2 Dialogue | 242 | ||
| 18.3 Expert determination | 243 | ||
| 18.4 Arbitration | 245 | ||
| 18.5 Litigation | 246 | ||
| 18.6 Arbitration or litigation? | 246 | ||
| 18.7 Consolidation | 248 | ||
| 18.8 Confidentiality | 248 | ||
| 18.9 Jurisdiction | 249 | ||
| 18.10 Sovereign immunity | 249 | ||
| 19. Accounting procedure | 252 | ||
| 19.1 Model form accounting procedures | 252 | ||
| 19.2 Accounting principles | 252 | ||
| 19.3 Contents of the accounting procedure | 253 | ||
| 19.4 Accounting procedure issues | 256 | ||
| 20. Other provisions | 260 | ||
| 20.1 Confidentiality and announcements | 260 | ||
| 20.2 Corporate and social responsibility | 263 | ||
| 20.3 Entire agreement and amendment | 265 | ||
| 20.4 Force majeure | 266 | ||
| 20.5 Governing law | 268 | ||
| 20.6 Health, safety and the environment | 269 | ||
| 20.7 Insurance | 270 | ||
| 20.8 Litigation management | 273 | ||
| 20.9 Notices | 275 | ||
| 20.10 Secondment and teams | 275 | ||
| 20.11 Taxation | 277 | ||
| 20.12 Third-party involvement | 278 | ||
| 20.13 Warranties and representations | 279 | ||
| Appendices | 282 | ||
| A: Model form JOAs | 282 | ||
| A1. Industry forms | 282 | ||
| A2. Country forms | 283 | ||
| B: Operator and non-operatingparty perspectives | 286 | ||
| B1. The operator’s perspective | 286 | ||
| B2. The non-operating parties’ perspective | 287 | ||
| B3. Reconciling the operational perspectives | 289 | ||
| B4. To operate or not | 292 | ||
| C: The joint study andbid agreement | 294 | ||
| C1. The rationale for a JSBA | 294 | ||
| C2. Preparing for entry into a JSBA | 295 | ||
| C3. The content of a JSBA | 295 | ||
| C4. Migration to a JOA | 296 | ||
| C5. Exclusivity | 298 | ||
| C6. Third parties and transfers | 298 | ||
| C7. Application procedure and voting | 298 | ||
| C8. Withdrawal | 299 | ||
| C9. Default | 299 | ||
| C10. Warranties | 300 | ||
| D: Partnership and the JOA | 302 | ||
| D1. Definition and consequences of partnership | 302 | ||
| D2. The JOA as a partnership | 304 | ||
| E: Farm-outs and the JOA | 308 | ||
| E1. The role of the FOA | 308 | ||
| E2. Issues with the FOA | 311 | ||
| F: Unitisation and the JOA | 318 | ||
| F1. The mechanics of unitisation | 318 | ||
| F2. An example of unitisation | 321 | ||
| F3. The UUOA and the JOA | 324 | ||
| G: Subdivisions | 330 | ||
| G1. Subdivision of the concession area | 330 | ||
| G2. Subdivision of the concession | 333 | ||
| H: Fiduciary duties and the JOA | 334 | ||
| H1. Defining and applying a fiduciary duty | 334 | ||
| H2. Fiduciary duties in the JOA | 335 | ||
| H3. Managing fiduciary duties in the JOA | 340 | ||
| I: Collateralisation of the JOA | 344 | ||
| I1. The need for collateral support | 344 | ||
| I2. Collateralisation from the outset | 346 | ||
| I3. Collateralisation upon a farm-out | 347 | ||
| I4. Decommissioning security | 348 | ||
| I5. Exclusive operations | 348 | ||
| I6. Forms of collateral support | 348 | ||
| I7. Collateral support across the project lifecycle | 351 | ||
| J: Unconventional petroleum JOAs | 352 | ||
| J1. Understanding the operational premise | 352 | ||
| J2. Definition of petroleum | 355 | ||
| J3. The role of the operator | 355 | ||
| J4. Defining joint property | 356 | ||
| J5. Scope | 357 | ||
| J6. Ongoing project development | 357 | ||
| J7. Exclusive operations | 358 | ||
| J8. Withdrawal | 358 | ||
| J9. Options for petroleum commercialisation | 358 | ||
| J10. Health, safety and environmental issues, and operator liabilities | 359 | ||
| J11. Operator liability | 359 | ||
| J12. Unitisation and joint development opportunities | 360 | ||
| J13. Decommissioning | 361 | ||
| About the author | 362 | ||
| Index | 364 |