Joint Operating Agreement (JOA) meaning

Introduction Typically, oil and gas licence holders put in place separate joint operating agreements (JOA) to govern their relationship and the way they intend to collaborate on exploration, development and production under a particular licence. For broader guidance on joint operating agreements in the sector, see Practice Notes: The purpose and the principles of the joint operating agreement and Joint operating agreement—key clauses. There are, however, situations where hydrocarbon reserves ‘straddle’ two or more licences that would otherwise be unrelated. In such cases, the following connected questions arise: how parties under different licences can produce hydrocarbons from these fields while sharing an objective of maximising potential without needlessly depleting the field how any revenues generated by operations conducted across two (or more) distinct licences should be allocated how to establish the respective interests of each licence holder To address these matters, the oil and gas industry has developed the concept of a ‘unitisation and unit operating agreement’. Participating interest,...

Where a joint operating agreement (JOA) establishes an operating committee (OpCom)—at least where the JOA contemplates such a body, as some do not—the OpCom is typically the primary arena in which the operator and the non-operating parties contest their positions. This Practice Note proceeds on the basis that a participant in the concession and the JOA is appointed as operator, rather than an engaged third-party operator, while noting that the principles set out here apply equally in respect of an incorporated operator entity, and that the JOA provides for an operating committee (OpCom) constituted to represent and safeguard the interests of the non-operating parties. For general information on joint operating agreements, see Practice note: The purpose and the principles of the joint operating agreement. The operator's perspective At a high level, the operator’s task is to exercise its rights and fulfil its obligations under the JOA in order to administer and manage the performance of the joint operations on behalf of all parties and, in doing so, to...

An Introduction to Oil & Gas Sales and Trading States grant businesses the right to search for and extract hydrocarbons (crude oil and natural gas) within a specified area under a concession. Those holding the concession commonly set out their mutual duties and rights for activities under that concession by agreeing a joint operating agreement (JOA). Where exploration, appraisal, development and production succeed, crude oil and natural gas are brought to the surface. For further detail on JOAs and concession arrangements, see Practice Notes: The purpose and the principles of the joint operating agreement and Understanding upstream petroleum agreements—concessions, production sharing contracts and service contracts. For more on the AIEN (formerly known as the AIPN) Joint Operating Agreement, consult the textbook: The AIPN Joint Operating Agreement: A Practical Guide. Physical v Non-physical (or Virtual) Sales and Trading A JOA will usually expressly exclude the marketing and sale of hydrocarbons from its scope. Each concession holder will therefore typically put in place separate arrangements to monetise its entitlement...