Joint Operating Agreements. Peter Roberts

to present the fourth edition of Joint Operating Agreements – A Practical Guide. We think it is very timely to update the book. We have prepared this edition in the prelude to and during the coronavirus pandemic which has brought significant change and enormous stress to the oil and gas industry. Joint operating agreements are, in many senses, the constitutions of joint ventures and a good joint operating agreement (JOA) should survive change by providing the mechanisms by which the joint venture navigates such crises. It will be important to see how some of the key clauses of these agreements are tested in circumstances which the drafters could never have imagined. In the heat of the crisis, it may be useful to remind ourselves just why these agreements are written the way they are and we hope this book will assist in that.

      This edition represents a significant change of direction, albeit a planned one. The number of appendices has been reduced, and their content largely folded into 20 chapters. We have added new chapters, covering topics such as the influence of the petroleum concession agreement on the JOA, how to address the participation of state-controlled entities in the joint venture, the transfer and use of technology, know-how and intellectual property in the joint venture, and the relevance of competition law for the activities governed by the JOA. We have also taken into account the impact of some of the significant cases since 2014 such as Spirit Energy v Marathon, TAQA Bratani Ltd and Others v RockRose UKCS8 Ltd and Cavendish Square Holding BV v Talal El Makdessi as well as some Commonwealth cases. This should help in giving negotiators and drafters even more confidence to understand and adapt the industry model agreements available.

      Our thanks go to Sian O’Neill and Lauren Simpson for their enormous patience, hard work and good humour in getting this fourth edition over the line.

      The opinions expressed in this book are personal to the authors and are not representative of the opinions of, and cannot be attributed to, their respective employer entities. The contents of this book do not represent legal advice and no attorney/client relationship is created or inferable between any of the authors and any other person.

      That being said, we welcome your comments, observations and criticisms and we can be contacted at [email protected] or [email protected].

      Peter Roberts and Reg Fowler

      August 2020

Glossary

      The following terms are used in this book:

AAPL JOA	The model form joint operating agreement issued by the American Association of Professional Landmen (AAPL).
Abandoned mine methane (AMM)	Methane that is released by coal mining operations and resides in worked and abandoned mine workings.
AFE	Authorisation for expenditure.
AIPN JOA	The model form joint operating agreement issued by the Association of International Petroleum Negotiators (AIPN).
American Petroleum Institute (API) gravity	The measure, expressed in degrees (°), of the weight of hydrocarbon relative to water, which is then applied to grade produced petroleum.
AMIA	Area of mutual interest agreement.
AMPLA JOA	The model form joint operating agreement issued by the Australian Mining Petroleum Law Association (AMPLA).
Associated gas	Natural gas that exists in solution with, and is typically produced in association with, crude oil (to be contrasted with non-associated gas, which is produced in its own right).
Bitumen	Crude oil in a semi-solid or solid form which has an API gravity below 10°.
BNOC JOA	The fifth round UK continental shelf model form joint operating agreement, issued in 1977.
CAPL JOA	The model form joint operating agreement issued by the Canadian Association of Petroleum Landmen (CAPL).
Coal bed methane (CBM)	Methane produced by drilling into unworked underground coal seams, sometimes also known as coal seam gas (CSG).
Condensates	Pentanes that exist as a liquid at ordinary atmospheric pressure and temperature.
Crude oil	Hydrocarbon deposits represented by light oil, medium oil and heavy oil.
DSA	Decommissioning security agreement.
FOA	Farm-out agreement.
Hydrocarbon	A generic term for organic carbon/hydrogen compounds which form the basis of all petroleum substances.
JSBA	Joint study and bid agreement.
JVC	Joint venture company.
Liquids	A generic term for condensates and natural gas liquids.
LNG	Liquefied natural gas.
MER UK	“Maximising Economic Strategy for the UK” policy document issued by the UK Oil & Gas Authority, 2016.
Natural gas	Hydrocarbon deposits occurring naturally as a gas or as mixed gas and liquids, consisting of methane, ethane, propane, butane and pentanes.
Natural gas liquids (NGLs)	Ethane, propane and butane extracted from a natural gas stream.
OGUK JOA	The model form joint operating agreement issued by Oil & Gas UK Limited (OGUK) for use on the UK Continental Shelf.
Petroleum	A generic term for crude oil, natural gas and liquids.
Petroleum laws	Prevailing legislation and regulation which allows for exploitation of a state’s mineral wealth.
PSC	Production sharing contract.
RMMLF JOA	The model form joint operating agreement issued by the Rocky Mountain Mineral Law Foundation (RMMLF).
UKCS