This form is used for the Designation of a Successor Operator pursuant to a specified Section of a Communitization Agreement. First Party is designated by Second Parties as Operator of the communitized area, and First Party desires to assume all the rights, duties, and obligations of Operator under the Communitization Agreement.
This Agreement is incorporated into this Designation by reference and made a part of it as fully and effectively as though the Agreement were expressly set forth in this Designation.
California Designation of Successor Operator (DSO) is a legal provision that allows one party to designate another party as a successor operator in the event of a change in ownership or control of an oil and gas lease or unitized operation. This provision ensures the smooth and efficient transition of operations and prevents any disruptions in the production and development of oil and gas resources. The DSO is typically included in an oil and gas lease or a commoditization agreement. A Commoditization Agreement is a contract between two or more owners of separate oil and gas leases located in the same geologic formation. It allows them to combine their leases into an unitized operation, pooling their resources for enhanced production and cost-efficiency. The California Designation of Successor Operator is essential in situations where the current operator is no longer able or willing to continue the operations or when there is a transfer of ownership or control. It ensures that a qualified and responsible party takes over the operations to maintain the lease or unitized operation's productivity without causing any delays or disruptions. There are various types of California Designation of Successor Operator agreements, depending on the specific circumstances and parties involved. Some common types include: 1. Assignment DSO: This type of DSO is used when there is a transfer of ownership of the lease or unitized operation to another operator. The assigning party designates the new operator as the successor operator, ensuring a seamless transition. 2. Succession DSO: In situations where the current operator is unable to continue operations due to bankruptcy, insolvency, or other unforeseen circumstances, a Succession DSO is executed. The DSO designates a new operator, often identified by a regulatory body, to take over the operations. 3. Force Mature DSO: When uncontrollable events, such as natural disasters or civil emergencies, prevent the current operator from fulfilling their obligations, a Force Mature DSO is utilized. The successor operator designated in this agreement takes over temporarily until the original operator can resume operations. 4. Emergency DSO: In cases of immediate danger to personnel or property, an Emergency DSO is executed. This agreement allows a designated party to take over operations quickly to mitigate the risk and ensure safety, until a regular DSO is established. In conclusion, the California Designation of Successor Operator and Commoditization Agreement are vital provisions in the oil and gas industry. They enable smooth transitions in ownership or control, ensure uninterrupted operations, and promote efficient utilization of resources. With various types of DSO agreements available, parties involved can choose the appropriate one to suit their specific circumstances and needs.
