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.
Idaho Cost Overruns for Non-Operator's Non-Consent Option refers to a specific provision in oil and gas leases that addresses the financial responsibility of non-operators who choose not to participate in a project. When it comes to oil and gas exploration and production, multiple parties usually come together to form a joint venture or partnership. The operator is typically the party responsible for conducting operations and making key decisions. Non-operators, on the other hand, may have a financial interest in the project but do not actively participate in its management or decision-making. In Idaho, non-operators who decide not to consent to a project are often given the option to bear the cost overruns that may occur during the project's execution. Cost overruns refer to unexpected or unplanned expenses that exceed the initial budget or estimates. These expenses could arise due to unforeseen geological challenges, technical issues, regulatory changes, or other factors that impact the project's progress. The purpose of the Cost Overruns for Non-Operator's Non-Consent Option is to ensure that non-operators who choose not to participate in a project still bear the financial consequences of any additional costs incurred beyond the originally projected budget. By including this provision in the lease agreement, operators can manage the risk associated with cost overruns and ensure the financial burden is appropriately distributed. There may be various types of Idaho Cost Overruns for Non-Operator's Non-Consent Options depending on the specific terms outlined in the lease agreement. Some common types include: 1. Fixed Percentage: Non-operators who choose not to consent may agree to pay a fixed percentage of the total cost overruns. For example, they may agree to cover 25% or 50% of any additional expenses beyond the initial budget. 2. Limited Liability: Non-operators may have a cap or limit on the amount they are responsible for in terms of cost overruns. This limit could be a specific dollar amount or a percentage of their initial investment. 3. Joint Decision-Making: In some cases, the operator and non-operator may agree to jointly make decisions regarding cost overruns. This ensures that both parties have a say in approving additional expenses and helps maintain transparency and fairness. It is important for both operators and non-operators to carefully review and negotiate the terms of the Idaho Cost Overruns for Non-Operator's Non-Consent Option. They should consider factors such as the potential financial impact, the overall project risk profile, and their specific roles and responsibilities within the partnership. By understanding the implications of this provision and considering the potential cost overruns, operators and non-operators can make informed decisions and effectively manage their financial obligations in Idaho's oil and gas industry.
