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Drafting of Joint Operating Agreements

George W. Hazlett, Proceedings of 3rd Annual Rocky Mountain Mineral Law Institute (1957)

In these times discussion of the ordinary joint operating agreement cannot avoid being more than a little trite, as practically everyone engaged in oil and gas production is so familiar with it that it is virtually impossible to introduce anything resembling a new or novel idea about it. However, the joint or cooperative method of operation is really a comparatively recent development, as it has become everyday practice only during the past fifteen or twenty years.

In the old days, the oil prospector was pretty much of a lone wolf, however small his operations might be. He wanted to keep for himself whatever he might find, and he wanted even more to be able to run his business in his own way. He could afford to go it alone because it was not too difficult to assemble a block of leases, wells were drilled to relatively shallow depths, and costs were low enough to be within his means. In recent years it has become necessary to drill ever deeper and deeper, with the result that costs have skyrocketed to such extent that even the large company often finds it desirable to share the risk of an exploratory well with others. Moreover, competition for leases has become so intense that the operator who finds a likely prospect is rarely able to lease all of it for himself.

These new conditions have made joint operations so frequent that nearly every company of any size h