LO&G members have extensive experience in commercial negotiations of different types of Petroleum Agreements. Additional legal support is generally required.
1. License and Contracting Agreements
- Signed between host country or state company and an Upstream Company to exploit hydrocarbon resources
- Cover among other the following aspects
- Obligations during exploration, appraisal, development and production phase (eg minimum work obligations, abandonment obligations)
- Ownership, transfer and assignment of assets and rights
- Government Take (eg Taxes, Royalties, Cost Share, Profit Share, Boni, etc.)
- Term and termination
- HSE regulations and obligations
- Liabilities, representations and warranties
- Ownership of data and confidentiality
- Legal framework (e.g. applicable law, Force Majeur, Dispute solution, etc.)
- Concession / License Agreement
- License to explore and exploit hydrocarbon resources
- Hydrocarbons produced belong to the upstream company
- Government Take via Royalties and taxes
- Production Sharing Agreement
- Upstream Company receives share of the hydrocarbon produced
- Entitlement includes limited cost share to recover cost and additional profit share on the remaining production
- Government Take could be additionally increased by taxes
- Service Agreements
- Upstream Company assumes the risk of the operations but has no entitlement to the hydrocarbon produced
- It receives a service fee (remuneration) based on the value of the hydrocarbon produced
2. Intercompany Agreements
Confidentiality Agreement
- Purpose: Exchange of data and confidentiality regulations
- Definition of Confidential data
- Duration of confidentiality obligation
- Liability (and eventual penalty) in case of violation
- Eventual non-competition clause
- others
Joint Study Bidding Agreement
- Purpose: Setup of a Joint Study and Bidding Group to jointly study and eventually supply a joint bid for an opportunity offered i.e. in a public license round or a public tender
- Shares in the group and determination of Operator
- Cost and work program of the study
- Default regulations
- Determination of potential bid
- Preliminary rules for Joint Operating Agreement
- Non-competition clause
- Legal Framework (Term, termination, confidentiality, applicable law, liabilities, etc.)
- others
Farm In / Out Agreement
- Purpose: Acquisition / Sale of an asset (Asset Deal)
- Often applied in exploration ventures, but also applicable for assets in other stages
- Determination and share of asset to be assigned
- Compensation for transferred asset (cash compensation, carry obligation, overriding royalty, net profit interest, etc.
- Legal Framework (Term, termination, confidentiality, applicable law, liabilities, etc.)
- others
Joint Operating Agreement (JOA)
- Purpose: Setup of contractual framework for the joint operation of (an) asset(s)
- Designation of the responsible party to carry out the operations (The Operator)
- Tasks and responsibilities of the operator
- Definition procedures of annual budgets and regulations for potential overruns
- Rules for decision making processes
- Rules for ‘Sole-Risk Operations’ (complex, but helpful, if certain operations are not agreed unanimously)
- Liabilities
- Accounting principles, rules for cash calls and auditing of the operator
- Default regulations
- Legal Framework (Term, termination, confidentiality, applicable law, liabilities, etc.)
- others
Share Purchase Agreement (SPA)
- Purpose: Acquisition / Sale of (shares of) a company
- Determination and shares of company to be transferred
- Compensation of purchase price
- conditions precedent (i.e. conditions which need to be fulfilled to make the transfer binding
- Closing procedures (i.e. legal and commercial steps to be taken to materialize the transfer of shares
- Representations and warranties
- Legal Framework (Term, termination, confidentiality, applicable law, liabilities, etc.)
- others