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.
Virgin Islands Cost Overruns for Non-Operator's Non-Consent Option refers to a legal provision in the Virgin Islands pertaining to the financial responsibility of non-operators in oil and gas exploration or drilling projects. Non-operators are usually minority interest holders who do not have operational control over the project. In the event of cost overruns, the Virgin Islands Cost Overruns for Non-Operator's Non-Consent Option provides guidelines for non-operators regarding their financial obligations. If a non-operator chooses not to consent to additional expenditures that exceed the original budget, they may exercise their non-consent option. This option allows non-operators to avoid shouldering the burden of the excess costs associated with the project. There are different types of Virgin Islands Cost Overruns for Non-Operator's Non-Consent Option, based on the specific provisions outlined in the operating agreement or lease agreement between the parties involved. Some of these types include: 1. Conditional Non-Consent: This type allows a non-operator to withhold consent if they have valid reasons such as the financial implications of the cost overruns being disproportionate to their interest in the project. 2. Enforced Participation: In certain cases, the operating agreement may stipulate that non-operators, even if they choose to exercise their non-consent option, are still obligated to pay their share of the overrun costs. This provision is known as enforced participation. 3. Penalty Clauses: Some agreements may include penalty clauses that impose additional financial consequences on non-operators who exercise their non-consent option, such as additional fees or forfeiting their rights to future earnings from the project. 4. Voting Provisions: The operating agreement may have specific voting provisions dictating the decision-making process when it comes to cost overruns. Non-operators' non-consent option may require a super majority or unanimous vote to be effective, ensuring a fair and transparent decision-making process. It is essential for non-operators and potential investors to carefully review and understand the specific terms and conditions set forth in the Virgin Islands Cost Overruns for Non-Operator's Non-Consent Option. Consulting legal professionals knowledgeable in oil and gas law and local regulations is strongly advised to navigate the complexities of these agreements and protect their financial interests.
