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.
Virginia Farm out by Non-Consenting Party refers to a specific type of agreement in the oil and gas industry. In this arrangement, a non-consenting party (referred to as the farmer) in an oil or gas lease relinquishes their rights to the lease, allowing another party (referred to as the farmer) to drill and produce from the leased property. The Virginia Farm out by Non-Consenting Party occurs when the farmer chooses not to participate in the drilling and production activities due to financial or other constraints. Instead, they agree to allow the farmer to take over and develop the lease in exchange for a percentage of the revenues generated from the production. There are different variations or types of Virginia Farm out by Non-Consenting Party, including: 1. Traditional Virginia Farm out: This is the standard type of farm out agreement where the farmer completely relinquishes their rights to the lease, including the right to receive revenues and any future development opportunities. 2. Partial Virginia Farm out: In this form, the farmer may choose to participate in some aspects of the drilling and production activities but not in others. They may opt to contribute financially for a specific number of wells or a certain phase of the project while still retaining some rights and benefits associated with the lease. 3. Overriding Royalty Interest Farm out: This type of farm out agreement grants the farmer a specified percentage share of the revenues generated from the production, known as overriding royalty interest (ORRIS). Unlike a traditional farm out, the farmer does not relinquish their full lease ownership but instead receives a consistent income stream from the ongoing production. 4. Area of Mutual Interest (AMI) Farm out: This type of agreement is commonly used when multiple parties jointly hold leases in a specific geographic area. The AMI farm out allows the participating farmer to acquire the farm out rights to explore, drill, and develop specific portions within the defined AMI area while relinquishing their rights in the remaining AMI area. In conclusion, a Virginia Farm out by Non-Consenting Party involves the surrender of lease rights by a non-consenting party to another party for drilling and production activities. This arrangement provides opportunities for efficient resource utilization and mutually beneficial partnerships between oil and gas industry players.
