When it comes to governing relationships in the Oil Field, few documents are more important than the Joint Operating Agreement. Under Texas common law, any cotenant may drill for and produce oil and gas under a tract of land without consent of the other cotenants or co-owners. However, that same cotenant also bears the full risk of a dry hole and must give an accounting to the non-consenting parties for their share of production.
Without a Joint Operating Agreement, or “JOA”, there are no set rules defining relationships, allocating risk and costs, or otherwise addressing issues before they become problems.
At Kearney, McWilliams & Davis, we have the experience and knowledge to help our clients draft and negotiate an effective JOA which will address and protect interests and effectively define the relationship for all parties involved. By establishing rules, rights, and duties for all the involved parties, an effective JOA can guide a project for many years.
The American Association of Professional Landmen has promulgated form JOAs since the 1950s. Since then, several versions have been widely used, and it is important to understand the nuances of each form and the way each works to define the relationship and govern practices. As the forms change, it is important to have a partner on your side to help guide you through the different terms and ensure that your property interests remain adequately protected. Further, many relationships are governed by old agreements which may have originally been drafted by parties no longer involved in the relationship. Our firm can help analyze an old JOA to accurately determine your rights and responsibilities in the relationship based the terms of the agreement as well as current oil and gas law.
There are many options when it comes to defining the cotenant and co-owner relationship in the oil field. We are prepared to assist you in drafting a strong, effective JOA to ensure that your relationships are clearly defined and your property rights are adequately protected.