AIPN Approves 2019 Farmout Agreement
The Board of Directors of the Association of International Petroleum Negotiators (AIPN) is pleased to announce the publication of its 2019 Model International Farmout Agreement.
The new agreement contains the rights and obligations of counterparties who wish to transfer a portion of an ownership interest in an upstream oil and gas granting instrument (such as a concession or a production sharing agreement) and provides for consideration consisting of a combination of cash payments and the performance of work obligations. The 2019 Model may be tailored to delineate project-specific terms through the use of optional provisions contained in the agreement, such as the type of consideration (e.g., cash payment, payments of historical costs, premium payments in cash up front, disproportionate future spending) and applicable conditions precedent to a transfer, which might include governmental consent, other necessary consents under a JOA, preferential rights under a JOA, and other third party approvals.
The 2019 Model is an update to the 2004 Model International Farmout Agreement. It is drafted primarily from an English law perspective but also contains optional provisions allowing it to be used in any jurisdiction. It presents a user-friendly format that has been improved to work in tandem with AIPN’s model JOA. The new version includes more form and substance to the provisions dealing with warranty, indemnity and termination and provides new options and alternatives to better customize the user’s experience.
The publication of the 2019 Model International Farmout Agreement concludes a substantial industry-wide effort. Co-chairs Jennifer Josefson (King & Spalding LLP) and Frank Cascio (Barnes & Cascio, Retired) and their drafting committee held numerous meetings over the years to prepare the 2019 revision. The drafting committee included broad industry participation comprising more than 200 representatives from several continents.
The new 2019 Farmout Agreement, which includes the 2019 Farmout Agreement Guidance Notes, is available for download free for members and $185 for non-members.