This ia a provision that states that any Party receiving a notice proposing to drill a well as provided in Operating Agreement elects not to participate in the proposed operation, then in order to be entitled to the benefits of this Article, the Party or Parties electing not to participate must give notice. Drilling by the parties who choose to participate must begin within 90 days of the notice.
Kansas Farm out by Non-Consenting Party refers to a specific arrangement in the oil and gas industry where a non-consenting party has the opportunity to participate in drilling operations on a farm out property in the state of Kansas. In this context, a non-consenting party is an individual or entity that holds an interest in the property but chooses not to contribute financially to drilling and production costs. The Kansas Farm out by Non-Consenting Party can be classified into two main types: 1. Voluntary Non-Consent (VNC) Farm out: In this type of farm out, the non-consenting party willingly chooses not to participate in the drilling operations. They typically retain a reduced interest in the property, allowing them to receive a share of any profits generated from the production. The non-consenting party has no say in the decision-making process regarding the operation or access to well data and information. 2. Involuntary Non-Consent (INC) Farm out: This type of farm out occurs when a party, despite their unwillingness to participate, is still forced to contribute financially to the drilling activities. This could be due to their failure to respond within the designated time frame or to a lack of financial ability to participate. The INC non-consenting party retains a working interest in the property but risks losing the interest if they fail to pay their share of expenses. In both cases, the non-consenting party typically has limited control over the operation's management and decision-making processes. They are often referred to as "carried interests" since they are carried by the consenting parties who bear the financial burden. However, the non-consenting party may benefit if the drilling operation is successful as they would receive their proportionate share of production revenues after deducting expenses. Farm outs are common in the oil and gas industry as they provide an opportunity for smaller, financially limited parties to participate in drilling activities while sharing the risk with other interest holders. These arrangements play a crucial role in maximizing the potential of oil and gas reserves in Kansas by allowing non-consenting parties to benefit from production activities without actively participating in the associated costs and risks. In summary, a Kansas Farm out by Non-Consenting Party is an arrangement where a non-consenting party has a stake in a farm out property in Kansas but chooses not to financially contribute to drilling costs. The two main types are Voluntary Non-Consent (VNC) and Involuntary Non-Consent (INC) farm outs. These arrangements facilitate shared risk and potential profits for all parties involved in oil and gas production in Kansas.
