Joint Operating Agreements: Operatorship; Joint Interest Billings

摘要

In November 1992, Engle and Giant Exploration & Production Co. enter into a joint operating agreement combining multiple federal oil and gas leases. Giant is designated as the operator A well is completed within the contract area. In August 1996, Giant sends a letter to Engle notifying him that it is giving up its operatorship in favor of Central Resources, Inc. Central files a notice with the Bureau of Land Management about the change in the operatorship. In September 2000, Central purchases all of Giant's issued and outstanding stock and sends a notice to Engle that Central is resigning as the operator and that Elm Ridge will be the new operator. Elm Ridge had purchased from Genual all of Giant's stock and assets. On October 1, 2000. Elm Ridge sends BLM a notice of the change of operator. In June 2005. Elm Ridge sends Engle a written notice with an AFE for a new well to be drilled within the contract area. Engle elects to participate, but under the terms of the JOA, if the operator does not commence drilling operations within 90 days, it would have to re-seek approval by the non-operating working interest owners. A well is not commenced within 90 days. In July 2008, a new proposal for drilling the well along with an AFE is submitted to Engle. After some discussions between Engle and Elm Ridge about the higher costs, Engle sends a letter electing not to participate. Shortly thereafter, Engle sends a second letter electing to participate but demanding that the drilling of the well be postponed.