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Area of Mutual Interest Agreements

Allen D. Cummings, Oil & Gas Agreements; The Exploration Phase (2009)

If you have ever drafted an agreement containing an area of mutual interest provision, try to recall how much actual discussion or negotiation there was concerning the terms of the provision. More often than not, there has been only minimal thought given to the terms of an area of mutual interest provision, unless the client has questioned about what purpose it expects to achieve, what advantage it expects to gain from and how it expects the area of mutual interest to operate, both today and six months before the term of the area of mutual interest ends. Even then, it may be difficult to get clients to give much thought to the area of mutual interest provisions.

This paper is intended to provide the practitioner with a checklist of issues to be considered and discussed with the client. Of course, not every area of mutual of interest provision will need to address each of the issues set forth below. However, by reviewing the circumstances in which an area of mutual interest provision will operate and the issue checklist set forth below, the practitioner and his client should avoid most unpleasant surprises in the application of the area of mutual interest provision. The paper includes some sample clauses and a sample area of mutual of interest provision, which are intended only as a starting point for drafting.

B. DRAFTING CONSIDERATIONS

1. KISS Princi