The fundamental basis of the agreement is the conditional granting of ownership participation in the project of the main mining company, provided that the farm-in party complies with certain expenditure obligations over an agreed period (an effective possibility for the main mining company to transfer the obligation to keep the leased houses in good condition to the operation in part, B. at the same time the interest in the project and the exhibition at Explorat Ions). Generally speaking, companies operate for opposite reasons to those that practice agriculture. One of the reasons for this is that the buyer has means and a lack of surfaces and perspectives, and conversely, the seller has surfaces and lacks means. Farmout agreements are effective risk management instruments for small oil companies. Without them, some oil fields would simply remain untapped due to the high risks to which each operator is exposed. Parties to a proposed Farmin agreement should consider whether earn-in commitments should be met by limiting the producer`s resources to the farmer`s exploration activities or whether the producer will carry out defined activities himself. (a) acquisition of shares. As far as documentation is concerned, this is usually a simpler method of acquiring an interest in a licence, since the buyer acquires the shares of the company that owns the licence.
On the other hand, in the event of an acquisition of assets, there will be a whole series of documents (which will increase according to the number of license interests transferred), including the transfer of shares, license assignments, novations of company agreements, transport contracts, pipeline agreements, lifting agreements, oil and gas sales contracts, novations or modifications of unification agreements (if the field has been unified), etc. I the buyer for an acquisition of shares, the type of acquisition depends on the form of the objective. If the company is a private company, a relatively easy private company acquisition can take place if the shareholders of the target company are willing to sell, although in practice the mechanisms of the transaction, unlike legal issues, will be more complex, the more widespread the participation in the company will be. An agreement where an operator acquires or acquires an interest in a lease agreement from another operator who has discovered or produced oil or gas. Often, farm-ins are being negotiated to help the original owner with development costs and ensure the buyer has a source of crude oil or natural gas. Finally, it is practically obvious to those involved in the economy of a country and abroad that it is desirable to consult at an early stage with the competent arm of the government when negotiating such an agreement, since the entire agricultural/farm-out transaction depends on the agreement of the government. The government will be interested in the identity of the farm-in party (in some cases its nationality), its financial strength and its technical skills. In the draft guidelines for farm-out and marginal field exploitation, the entry requirements imposed by the Nigerian Department of Petroleum Resources provide for the requirement for the operating company to prove its technical competence and financial capacity, the party that must be a citizen in Nigeria, but may have a foreign technical partner that may not have more than forty percent. . .