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.
According to Chron, a joint operating agreement is when your company and another company agree to contribute resources and strengths to form and operate a third entity. Working together, your partnership can maintain ownership of the entity and enjoy the benefits that result from its success, while sharing the responsibilities of operation and execution associated with ownership. Some critical parts of a joint operating agreement include the following:
- Each party’s rights and responsibilities.
- How long the agreement will be effective for.
- What the financial interests will be.
- A description of all of the operations that will be undertaken.
When you understand what a joint operating agreement is, you can make a more confident decision about whether or not it is the right decision for your company. For more information about contracts, visit our web page.