Energy & Resources

A farmout agreement is a contract where one party (the farmee) agrees to carry part or all of the drilling and completion costs on an oil and gas lease in exchange for an interest in the property. Farmouts are commonly used to spread development costs, share risk, and incentivize exploration by partners who have capital or technical expertise. You need one whenever you are seeking a partner to fund exploration or development work on your acreage.

An operating agreement (or joint operating agreement) governs how co-owners of an oil and gas property work together to develop and produce that property. It covers capital contributions, expense sharing and cost allocation, voting rights, operator selection and duties, management committees, decisions requiring unanimous consent (reserved matters), insurance, and dispute resolution. In Alberta, most agreements reference or adapt the CAPL (Canadian Association of Petroleum Landmen) standard form, though custom provisions are common.

The approvals required depend on your activities. Oil and gas operations typically require AER approval for well drilling, hydraulic fracturing operations, pipeline construction or modification, facility applications, and production licensing. Each approval involves review of technical, environmental, and safety aspects. We identify all applicable requirements and manage the AER application and approval process, which typically takes 4-12 weeks depending on complexity.

Alberta oil and gas projects must comply with both provincial and federal environmental reviews. Projects on Crown land require consultation with Indigenous groups, and federally regulated projects trigger mandatory consultation under the Impact Assessment Act. Alberta's Environmental Protection and Enhancement Act (EPEA) and provincial approvals apply universally. Consultation must be meaningful and documented.

Oil and gas asset sales typically involve purchasing producing properties, undeveloped leases, or infrastructure. Transactions include detailed asset schedules, representations about title quality and encumbrances, production history and reserves data, environmental liabilities, and regulatory compliance status. Due diligence focuses on reserve valuation, AER compliance history, environmental liability, royalty obligations, and surface restrictions.