Back to Publications

Duties of Operator or Manager to Its Joint Venturers

Christopher Lane, Catherine J. Boggs, Proceedings of 29th Annual Rocky Mountain Mineral Law Institute (1983)

Joint operations to develop mineral properties are here to stay. Whether in the field of oil and gas exploration and development, where joint development arrangements have been the rule for years, or in hard rock mining where such operations were the exception but have in recent years been utilized more frequently, the need to spread the costs and risks of mineral exploration and development dictates that companies work together. Volumes have been written on the relationships created by parties joining together to develop mineral properties.1 Relationships from the storied grubstake agreement to the general commercial partnership have been explained, analyzed, distinguished, compared, and contrasted. Their legal nature and many of their practical implications have been discussed in great detail. This paper will not presume to attempt a panoptic view of that body of material.2 [200] Rather, it will have a significantly more narrow focus, albeit one which has broadened as the authors have delved into the subject matter: the fiduciary obligations of parties to a joint operation, and particularly, the fiduciary obligation of the operator to the nonoperating parties. Other writers have acknowledged the existence of these fiduciary duties, and have discussed them briefly,3 but the scope and implications of those obligations for the participants in joint operations have not been full