California Oil and Gas Law Blog

You have recently discovered a promising opportunity to initiate a new oil exploration effort in California. This will require you to coordinate and implement a contractual agreement that will protect your rights, as well as the rights of the landowner and his or her property and assets. At Ehrlich Pledger Law, LLP, we have helped many people to secure beneficial contract agreements that provide protection and clarification. 

While you may be influenced by the promise of making considerable money once your contract is in place and exploration begins, it is imperative that you remember that securing a good contract is about more than negotiating significant financial agreements. According to geology.com, other important parts of the contract that you should read thoroughly, and verify that all parties understand the language of, include the following:

• Property reservations where mining is not allowed.
• Guidelines and agreements related to the protection of the owner's property, including buildings, livestock and roads.

As you are probably aware, the oil and gas industry can be a highly lucrative business to be involved in. As one of the many competitors in California, one of your biggest challenges will be to strategize and come up with creative ways to stay ahead of your competition. One of your options is to collaborate with other industry leaders to form a joint operating agreement. Understanding how this type of relationship functions is critical to pursuing an agreement that is rewarding, trustworthy and successful. 

According to Chron, a joint operating agreement is often decided when a certain project or end goal is in need of being completed. The agreement itself consists of a few important parts including the following:

• Description of operations: This portion will discuss how you and the other parties have arranged responsibilities. Notes should be included to describe how certain components will be delegated and under what parameters goals will be accomplished. Examples of what you could include are hours of operation, drilling zones and approved drilling techniques. 
• Financial interests: Under this section of the contract, you should clarify how financial interests will be protected in various circumstances such as dissolution or in scenarios where your agreement does not work out as planned. 
• Rights and responsibilities: Chances are you and the other party both have desired outcomes to the agreement. This section allows you to determine what each other's rights are and what each of your responsibilities are in order to uphold a functional agreement. 

Recently, you have decided to explore your options with joining forces with other owners of oil and gas royalties in California. One of your options is called a joint operating agreement and if pursued the right way, could potentially result in a wildly successful outcome. At Ehrlich Pledger Law, LLP, we are experienced in providing oil and gas owners with advice regarding partnerships and contract law. 

Creating a partnership agreement with another oil and gas company can have many exceptional advantages. Among the most notable, is that you can enjoy access to advanced technologies and core competencies from another company that you may be lacking in yourself. Likewise, your partner can gain benefits from your strengths. Through a synergistic relationship, both your company and your partner's company may be able to become more competitive in the industry. 

Owners of wells and real estate rich in minerals in California appear to have many advantages thanks to the state's massive underground reservoirs of oil. The state's economy and many of its individual and corporate residents have relied on the bounty that mining crude oil has provided. With the wealth of buried riches, many people may wonder why production is not increasing to meet the demand for gasoline.

In one of the largest oil producing locations in the state, San Joaquin Valley's Midway-Sunset field, production has dropped by 100,000 barrels per day over the last 20 years. The problem is not a lack of oil. Instead, it stems from environmental regulations that force California refineries to ship oil from overseas rather than produce its own.