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Drilling and Other Development Operations Under the Model Form Operating Agreement

John R. Reeves, Oil & Gas Agreements: Joint Operations (2007)

The purpose of a joint operating agreement is to encourage and facilitate the development of oil and gas interests.

Without a mechanism to facilitate and encourage the development of oil and gas interests, such interests would remain merely intangible legal concepts. It is only when a party is willing to assume risk and spend money in connection with the drilling of a well so as to reduce to possession the oil and gas in the earth that the legal concept of a mineral or working interest has any tangible meaning. An operating agreement is aimed at facilitating the development of oil and gas interests so that such interests have true worth and value.

BACKGROUND

Development of the Model Form Operating Agreement

In the oil and gas industry in the continental United States for privately owned lands, a reference to a joint operating agreement normally refers to one of the versions of the American Association of Petroleum Landmen (A.A.P.L.) Form 610 Model Form Operating Agreement. The Model Form Operating Agreement has been in use in the oil and gas industry in one form or another since 1956.1

Prior to 1956, there was no standard form operating agreement that had been accepted and used in the oil and gas industry. The development of the Model Form Operating Agreement began in 1952, when a group of oil and gas representatives, mostly landmen,