SOLE RISK PROVISIONS IN JOINT OPERATING AGREEMENTS FOR UNCONVENTIONAL OIL AND GAS DEVELOPMENT

This article discusses independent operations in the context of unconventional oil and gas resources. It considers how the Canadian Association of Petroleum Landmen (CAPL) and the Association of International Petroleum Negotiators (AIPN) have reacted to this. It provides a detailed analysis of the differences between the 2015 CAPL Operating Procedures and the 2014 AIPN Unconventional Resources Operating Agreement. Particular focus is given to permissible independent operations under each agreement, the timing of those independent operations, and the penalties given to a non- participating party. The article concludes by discussing the importance of drafting customized sole risk provisions in some situations, given that unconventional resource development often varies from project to project.