The concession is one of the main interests that can be created. It is the agreement that transfers and transfers a particular interest in one property to another person. It has long been used in many parts of the world to transfer interests in land and resources from one party to another. The interest is usually not a direct sale or purchase, but for a certain period of time, usually between the company and the state that has incorporated oil in its country. This does not imply a complete transfer of land, but it does mean that the owner grants permission to the company that wants to work in the country. Joint exploitation agreements usually take one of two forms. In some cases, a joint venture is established. The companies participating in JOA form a third company which is jointly owned. The joint venture is capitalized by the participating companies and managed by a board of directors composed of officers or persons selected by each of the participating companies. While all companies contribute equal amounts of capital, they generally share equal shares in the ownership and profits of the joint venture. Joint enterprise agreements make it possible to pool resources and spread risks. They also guide how the joint operation pays out revenues and profits. In the complex and high-dollar world of oil and gas exploration and production, a contract is a crucial element in protecting everyone involved.
However, each party must exercise due diligence on each contract in order to protect its own interests. The operator is responsible for the day-to-day management and operation of the land. This is usually a single party with the greatest interest in the agreement. However, it is not uncommon to have a designated operator who is a minority of the agreement. Although the operator is entitled to full control over the holding, he generally receives no remuneration. The main task of the operator is to carefully plan activities in order to increase the profitability of operations. However, it is not liable for the loss of production or turnover resulting from its decisions, except in cases of gross negligence and/or intent. As the name suggests, parties other than the operator are referred to as “non-operators”.
The most important duty of non-operators is to respond to all calls for funds as required by the operation. Non-operators are part of the Joint Operating Committee (COC), which oversees the operator`s activities. The voting rights of operators and non-operators in the YCW are based on the shares they hold in JOA. The main risk of entering into a joint operating agreement arises when a roommate does not fully understand the agreement. An example from the Landman blog provides an example of what can happen if a roommate has not done their due diligence before signing. .