This form provides that when Operator, in good faith, believes or determines that the actual costs for any Drilling, Reworking, Sidetracking, Deepening, or Plugging Back operation conducted under this Agreement will exceed a designated of the costs estimated for the operation on the approved AFE, the Operator will give prompt notice by telephone to the other Parties participating in the operation, as well as delivering a supplemental AFE estimating the costs necessary to complete the operation. Each Party receiving the supplemental AFE shall have forty-eight from receipt of the notice to elect to approve Operators recommendation or propose an alternative operation.
Connecticut Cost Overruns for Non-Operator's Non-Consent Option refers to a specific provision in Connecticut's oil and gas industry regulations. When an operator conducts drilling or exploration activities on a leased property, the non-operator or co-owner who does not consent to the operations can face potential cost overruns. In this scenario, cost overruns occur when the total expenses incurred during the drilling or exploration activities exceed the initial estimated budget for the project. These overruns can be caused by various factors such as unexpected geological challenges, equipment problems, or changes in regulatory requirements. A non-operator or co-owner who chooses not to consent to these operations might still be liable for their share of the cost overruns. However, the specific provisions for cost overruns and non-operator non-consent options can vary depending on the lease agreement or the governing regulations. There are different types of cost overruns for non-operator's non-consent options in Connecticut. These include: 1. Drilling Cost Overruns: These occur when the expenses associated with drilling, such as rig rental, labor, materials, and supplies, exceed the initially estimated budget. Non-consenting non-operators may be responsible for their proportional share of these additional costs. 2. Exploration Cost Overruns: If exploration activities, such as seismic testing or core sampling, result in higher costs than anticipated, non-consenting non-operators may bear a portion of these cost overruns. 3. Completion Cost Overruns: After drilling is finished, completing the well for production purposes can also lead to unforeseen costs. If non-operators do not provide their consent for these completion operations, they may still be responsible for their proportionate share of any budget overruns. 4. Operating Cost Overruns: Once a well becomes operational, ongoing expenses for maintenance, repairs, and regular operations can sometimes exceed the projected budget. Non-consenting non-operators might need to contribute to these excess costs depending on the specific regulations and lease terms. It is crucial for non-operators to thoroughly review and understand the terms of their lease agreements and the regulations in Connecticut to assess their potential liabilities for cost overruns. Consulting with legal experts specializing in oil and gas law can provide valuable guidance in navigating these complex scenarios.
