Understanding the Footage Drilling Contract in Oil & Gas Law
Definition & meaning
A footage drilling contract is an agreement in the oil and gas industry where a drilling contractor is compensated based on the number of feet drilled. The contractor is tasked with reaching a specific geological formation or depth, and they have significant control over the methods and processes used to complete the drilling. In this arrangement, the contractor assumes the risks associated with unexpected delays and other liabilities, which means the lease operator is not held accountable for these issues.
Table of content
Everything you need for legal paperwork
Access 85,000+ trusted legal forms and simple tools to fill, manage, and organize your documents.
Footage drilling contracts are primarily used in the oil and gas sector. They are a crucial part of drilling operations, where legal considerations include contract enforcement, liability, and risk management. Users may find that legal templates related to these contracts can help them navigate the complexities of drilling agreements. These templates, available through resources like US Legal Forms, are drafted by experienced attorneys and can assist both contractors and lease operators in ensuring their agreements are clear and legally sound.
Key Legal Elements
Real-World Examples
Here are a couple of examples of abatement:
Example 1: A drilling contractor enters into a footage drilling contract to drill a well in Texas, agreeing to a rate of $150 per foot. They encounter unexpected geological challenges, but since the contract stipulates that the contractor bears the risk, they are responsible for any additional costs incurred.
Example 2: A lease operator hires a contractor under a footage drilling contract to reach a depth of 10,000 feet. If the contractor completes the drilling at 10,500 feet, they are paid for the additional 500 feet drilled, demonstrating the financial incentives tied to footage.
State-by-State Differences
State
Variation
Texas
Commonly uses footage contracts; specific regulations may apply.
Oklahoma
Similar practices; however, local laws may impose additional requirements.
California
Footage contracts are used but may be subject to stricter environmental regulations.
This is not a complete list. State laws vary and users should consult local rules for specific guidance.
Comparison with Related Terms
Term
Definition
Key Differences
Footage drilling contract
Contract based on payment per foot drilled.
Contractor bears risk of delays and liabilities.
Daywork contract
Contract where payment is based on time spent drilling.
Risk is often shared between contractor and lease operator.
Turnkey contract
Fixed price for drilling a well to completion.
Contractor assumes most risks and costs upfront.
Common Misunderstandings
What to Do If This Term Applies to You
If you are entering into a footage drilling contract, it is essential to clearly outline the terms, including payment rates and responsibilities regarding delays or issues. Consider using legal templates from US Legal Forms to draft your contract, ensuring that it meets legal standards and protects your interests. If your situation is complex, consulting a legal professional may be beneficial.
Quick Facts
Typical payment: Varies by contract, often $100 to $200 per foot.
Jurisdiction: Primarily in oil and gas regions.
Liability: Contractor assumes risk for delays and issues.
Key Takeaways
FAQs
It is a contract where a drilling contractor is paid based on the footage drilled to a specified depth.
The contractor is responsible for any delays or issues that arise during the drilling process.
Yes, using a legal template can help ensure that your contract is comprehensive and legally sound.
