Bracewell’s Alastair Young, Darren Spalding and Chris Travis recently reviewed in The Oath the new Association of International Petroleum Negotiators (AIPN) oil and gas farm-out agreement and its impact on the Middle East.
In June 2019, the oil and gas industry body, AIPN, published a revised version of its model form international farm-out agreement. The publication of this new model form agreement is a reflection of the increased sophistication, and continuing evolution, of the farm-out market in the Middle East and globally.
Like the predecessor 2004 model form, the new 2019 version of the agreement deals with the transfer of a portion (but not all) of the ownership (known as a “participating interest”) in an upstream oil and gas asset from one party to another. The updated version provides for more detailed drafting of key provisions, reflecting recent practice, and also offers a broader set of alternatives to parties negotiating a farm-out transaction. As with all model forms, and as the new guidance notes state, it should be used only as a guide to inform the possible structure of an agreement, and not applied dogmatically. The new model form is most appropriate in the context of an exploration asset, rather than a development or producing asset.
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