The 1989 JOA is one of the most common O&G forms. However, updates are need in response to 25 years of case law and continually evolving custom & practice.
As we discussed in the last article pertaining to Oil and Gas Joint Operating Agreements, the JOA is one of the most commonly used instruments in the oil and gas industry today. A JOA provides the crucial foundation upon which multiple leasehold cotenants can cooperate in the joint exploration, development, and production of oil and gas properties. For example, JOAs cover the terms and conditions under which the operator is to conduct operations, such as drilling the initial well, it provides a voting mechanism for future operations, and establishes a basis for which the costs of operations are to be paid. In addition, the Form 610 describes how the cost and revenue sharing percentages of the parties are to be calculated, how the operators and non-operators will handle title issues, and also covers the potential future acquisition and/or disposition of interests within the contract area.
By far the most common form is the AAPL Form-610. However, the last major revision of the Form-610 was made in 1989. THerefore, this form simply does not take into account the last 25 years of crucial case law updates and changes to industry custom and practice. As a result, many believe an update is sorely needed.
Recently, as will be discussed below and in future articles on this blog, the AAPL has created a new committee to update and revise the JOA to create a new major revision. Perhaps it will be referred to has the “2014 Form-610” or the “2015 JOA.” As of the date of this article, the committee has not yet finished this revision.
However, the committee has created and published a new minor revision to the 1989 JOA, designed to cover crucial aspects relating to horizontal operations. In the next article in this series, we will cover many of the modifications introduced by the committee in the Horizontal version of the 1989 Form 610 JOA. Then in later articles, we will cover several important cases that have been decided in the last 25 years, many of which are routinely addressed in the Additional Provisions section of most JOAs today.
But for the topic of this article, what is this history of the AAPL Form 610 JOA? Why did AAPL publish a Horizontal version? Why has the AAPL formed a committee to produce a new major revision? Does it need a major overhaul? What are some shortcomings that have been experienced over the past 25 years?
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