This form is one which grants the Operator the right to request and receive from each Non-Operator payment in advance of its respective share of (i) the dry hole cost or (at Operator’s election) the completed well cost for the Initial Well to be drilled.
Utah Advance of Well Costs refers to a financial assistance program provided by the state of Utah to help operators and companies in the oil and gas industry cover the upfront costs associated with drilling wells. The Utah Advance of Well Costs program is designed to encourage continued exploration and production activities in the state by assisting operators in mitigating the financial risks involved in drilling new wells. By providing financial support for upfront costs, the program aims to facilitate the development of oil and gas resources, promote economic growth, and enhance energy independence. The program offers various types of advance funds to address different stages of well drilling. These types include: 1. Exploration and Prospecting Advances: Designed to aid in the identification of areas with high potential for oil and gas resources, these advances cover the costs associated with geological and geophysical surveys, lease acquisition, lease rentals, and other preliminary activities involved in prospecting for potential drilling locations. 2. Pre-Drill Advances: Once a suitable drilling location has been identified, pre-drill advances help operators cover expenses related to permitting, environmental assessments, well design, engineering studies, and other preparatory tasks required before drilling commences. 3. Drilling Advances: These advances support the actual drilling phase of a well. They cover costs such as rig and equipment rental, drilling services, cementing, casing, mud engineering, directional drilling, and well logging, among others. 4. Completion and Production Advances: After drilling is complete, these advances assist in covering costs associated with completing the well for production, including well stimulation, hydraulic fracturing, wellhead equipment, flow testing, and installing production facilities. It's important to note that the Utah Advance of Well Costs program typically requires operators to repay the advances upon the commencement of production or other specified milestones. Repayments ensure that the funds can be recycled to support future well drilling activities, ultimately sustaining the program's success and benefiting the industry as a whole. In summary, Utah Advance of Well Costs is a financial assistance program in Utah that provides advance funds to help operators cover upfront expenses related to exploration, pre-drilling tasks, actual drilling, and completion phases of oil and gas well projects. These advances aim to incentivize and support continued exploration and production activities while reducing the financial risks associated with drilling operations.
