BROWSE

Farmout

What is 'Farmout'

Farmout is the assignment of part or all of an oil, natural gas or mineral interest to a third party. The interest may be in any agreed-upon form, such as exploration blocks or drilling acerage. The third party, called the "farmee," pays the farmor a sum of money up front for the interest and also commits to spending money to perform a specific activity related to the interest, such as operating oil exploration blocks, funding expenditures, testing or drilling. Income generated from the farmee's activities will partly go to the farmor and partly go to the farmee in percentages determined by the agreement.

Explaining 'Farmout'

A company may decide to enter into a farmout agreement with a third party if it wants to maintain its interest but wants to reduce its risk or doesn't have the money to undertake the operations that are desirable for that interest. Farmout agreements give farmees a potential profit opportunity that they would not otherwise have access to. Government approval may be necessary before a farmout deal can be finalized.


Further Reading


Farmout valuation using exotic real options
www.onepetro.org [PDF]
Abstract This paper describes a Real Options evaluation of a real-world farmout opportunity in case history format. The Real Options evaluation utilizes exotic options (standard barrier option and cash-or-nothing binary options) borrowed from the fi.

Wealth effects of farmout arrangements in the oil and gas industryWealth effects of farmout arrangements in the oil and gas industry
papers.ssrn.com [PDF]
Abstract This paper describes a Real Options evaluation of a real-world farmout opportunity in case history format. The Real Options evaluation utilizes exotic options (standard barrier option and cash-or-nothing binary options) borrowed from the fi.

Lease Operatorships and Farmouts: Changing the Oil Production Scenario in Trinidad's Land-Based FieldsLease Operatorships and Farmouts: Changing the Oil Production Scenario in Trinidad's Land-Based Fields
www.onepetro.org [PDF]
Abstract This paper describes a Real Options evaluation of a real-world farmout opportunity in case history format. The Real Options evaluation utilizes exotic options (standard barrier option and cash-or-nothing binary options) borrowed from the fi.

The Economics of Farm-Outs (includes associated papers 21635 and 21888)The Economics of Farm-Outs (includes associated papers 21635 and 21888)
www.onepetro.org [PDF]
Abstract This paper describes a Real Options evaluation of a real-world farmout opportunity in case history format. The Real Options evaluation utilizes exotic options (standard barrier option and cash-or-nothing binary options) borrowed from the fi.

Selected Topics Regarding the Taxation of Oil and Gas Farmout TransactionsSelected Topics Regarding the Taxation of Oil and Gas Farmout Transactions
heinonline.org [PDF]
Abstract This paper describes a Real Options evaluation of a real-world farmout opportunity in case history format. The Real Options evaluation utilizes exotic options (standard barrier option and cash-or-nothing binary options) borrowed from the fi.

Analysis helps determine farm-in fractional interestAnalysis helps determine farm-in fractional interest
www.osti.gov [PDF]
Abstract This paper describes a Real Options evaluation of a real-world farmout opportunity in case history format. The Real Options evaluation utilizes exotic options (standard barrier option and cash-or-nothing binary options) borrowed from the fi.

Watchdog on a leash <span style=[Audit Victoria, controlled by a government appointed Board will farm out government auditing work to private sector firms, leaving Ches …' src='/thumbnails/?img=https%3A%2F%2Fsearch.informit.com.au%2FfullText%3Bres%3DIELAPA%3Bdn%3D980505033' />Watchdog on a leash [Audit Victoria, controlled by a government appointed Board will farm out government auditing work to private sector firms, leaving Ches …
search.informit.com.au [[Audit Victoria, controlled by a government appointed Board will farm out government auditing work to private sector firms, leaving Ches …' href='https:/api.miniature.io/pdf?url=search.informit.com.au%2FfullText%3Bres%3DIELAPA%3Bdn%3D980505033'>PDF]
Abstract This paper describes a Real Options evaluation of a real-world farmout opportunity in case history format. The Real Options evaluation utilizes exotic options (standard barrier option and cash-or-nothing binary options) borrowed from the fi.

The rise of the virtual stateThe rise of the virtual state
www.jstor.org [PDF]
Abstract This paper describes a Real Options evaluation of a real-world farmout opportunity in case history format. The Real Options evaluation utilizes exotic options (standard barrier option and cash-or-nothing binary options) borrowed from the fi.

A simplified utility framework for the analysis of financial riskA simplified utility framework for the analysis of financial risk
www.onepetro.org [PDF]
Abstract This paper describes a Real Options evaluation of a real-world farmout opportunity in case history format. The Real Options evaluation utilizes exotic options (standard barrier option and cash-or-nothing binary options) borrowed from the fi.



Q&A About Farmout


What is a farmout?

A farmout is the assignment of part or all of an oil, natural gas or mineral interest to a third party.

Why might companies decide to enter into a farmout agreement with another company?

Companies may decide to enter into such agreements if they want to maintain their interest but want to reduce their risk or do not have the money necessary for certain operations.

How does a farmee benefit from entering into a farmout agreement with a farmor?

The farmee benefits by gaining access to opportunities that they would not otherwise have had access to.

Leave a Reply

Your email address will not be published. Required fields are marked *