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.
Virginia Cost Overruns for Non-Operator's Non-Consent Option refers to a legal provision that allows non-operators in the oil and gas industry to avoid financial responsibility for cost overruns in exploration or drilling projects in the state of Virginia. This option applies when a non-operator chooses not to participate in a project despite being given notice and the opportunity to contribute financially. In Virginia, there are different types of cost overruns for non-operator's non-consent options: 1. Dry Hole Cost Overruns: This type of cost overrun occurs when the well drilled in an exploration project fails to produce commercially viable quantities of oil or gas. Non-operators who exercise the non-consent option are typically protected from sharing the financial burden of such unsuccessful ventures. 2. Developmental Cost Overruns: These cost overruns arise during the development phase of a drilling project, after a successful exploration. Developmental cost overruns can be caused by unforeseen circumstances or complications encountered during the drilling and completion process. Non-operators utilizing the non-consent option are shielded from shouldering these additional expenses. 3. Operational Cost Overruns: Once a well is in production, operational cost overruns may occur due to unexpected maintenance, repairs, or inefficiencies. Non-operators who have chosen to exercise the non-consent option are generally relieved from contributing to these increased operational costs. It's worth noting that the specific terms and conditions of Virginia's Cost Overruns for Non-Operator's Non-Consent Option may vary depending on the contractual agreements between operators and non-operators. These agreements often outline the details of the non-consent option, including the notice period, the cost calculation methods, and any potential consequences for non-operators who choose the non-consent option. Non-operators in Virginia's oil and gas industry should carefully review and understand the terms of the non-consent option, as it can significantly impact their financial obligations and potential liabilities in drilling projects. Seeking legal advice is crucial to ensure compliance with regulations and to protect their interests.
