Logic Joint Operating Agreement

When using technical references, it is important to ensure that certain sequential JOA activities partially overlap with the lifecycle of the license and the JOA. When the definition of common actions refers to what they are one after the other, it must also recognize that certain activities may overlap or be excluded from the order (for example. B a portion of the licence area may be examined and developed at a different time than other parties) and must ensure that it does not unintentionally exclude these activities from defined common activities. The key to the JOA is the requirement that the parties be able to finance in a timely manner the financial commitments related to the license and the JOA by making payments in response to the cash calls or invoices of the operator. In the absence of initial and/or current solvency of a party, it is prudent (and predictable) that other parties need some form of guarantee for that party`s payment obligations. Given the common nature and several types of licensing obligations to the government, the entry of this party into the JOA should be conditional on the simultaneous granting of collateral support for its multiple liability for its obligations under the JOA and to the government. It is not uncommon for a joint venture, particularly in the case of a foreign joint venture, to require that its licensing shares be held by a newly created subsidiary. It could be a subsidiary that lacks a strong financial alliance. Experience also shows that it is customary for a new foreign entrant to the UKCS to use its parent company for the purpose of applying for a licence, but in the event of a successful licence application, it cedes membership to a newly created subsidiary. Such proposals make a party with potentially low creditworthiness become part of the license and the JOA. At the time of filing the licence application with DECC, potential parties to the joint venture must have identified and indicated which of the parties would act as an operator. This decision as to who will be the operator will therefore be taken ahead of negotiations and entry into the JOA. This is not a controversial area.

As a general rule, the parties share a predetermined understanding of the overall role of the operator and want joint operations to be conducted properly and have therefore identified one of their members as the most appropriate candidate. The body representing the parties to the JOA in decision-making under the JOA is generally referred to as the “Enterprise Committee” or “OpCom.” OpCom consists of a designated representative of each party, each representative having a single voting right, weighted according to the proportional share of the party he represents. The voting control mechanism is essential in determining how non-active parties to the JOA can have some influence and control over how their interests are served by the operator. It is likely that the JOA will require the unanimous agreement of the parties on a limited number of important decisions, and for other decisions, the positive vote of the parties will be necessary to exceed a certain threshold set.


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