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A bottom-hole agreement is a type of contract commonly used in the oil and gas industry. In this agreement, one party, known as the contributing party, commits to providing financial support to another party, referred to as the drilling party. This support is typically in the form of cash contributions. In return, the drilling party agrees to share geological or drilling information, provided that the well is drilled to a predetermined depth. These agreements help facilitate the exploration and development of oil and gas resources.
Table of content
Legal Use & context
Bottom-hole agreements are primarily utilized in the oil and gas sector. They fall under the broader category of contracts and are relevant in legal practices involving energy law and commercial agreements. These agreements can help mitigate the financial risks associated with drilling operations. Users can manage these agreements through legal templates available on platforms like US Legal Forms, which offer resources drafted by experienced attorneys.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A small oil company enters into a bottom-hole agreement with an investor who agrees to fund a portion of the drilling costs. In exchange, the investor receives detailed geological reports and data once the well reaches the agreed depth.
Example 2: A drilling company collaborates with a research institution under a bottom-hole agreement. The institution provides financial backing for drilling, and in return, they receive access to the findings from the drilling operations. (hypothetical example)
State-by-state differences
Examples of state differences (not exhaustive):
State
Variations
Texas
Commonly uses bottom-hole agreements in oil and gas leases.
California
Regulations may require additional disclosures in bottom-hole agreements.
Oklahoma
Bottom-hole agreements are often part of joint operating agreements.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Common misunderstandings
What to do if this term applies to you
If you are considering entering into a bottom-hole agreement, it is essential to understand the terms clearly. Review the agreement carefully and ensure that all parties are in agreement on the contributions and information sharing. You may want to consult a legal professional for advice specific to your situation. Additionally, you can explore US Legal Forms for templates that can help you draft or review such agreements effectively.
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