Boost the utilization of your HCL environment by reevaluating use cases and f...
The International Farmout Process
1. THE OIL AND GAS FARMOUT
PROCESS
It is important to understand the workflow and allocate
time and money accordingly
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2. I like to classify the process into five phases
1. Planning and Preparation
2. Marketing
3. Engagement
4. Closing
5. Post-Closing
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3. 1. Planning
• Prepare a strategy
• Put together a farmout “brochure” or “information memorandum”.
• Collate and prepare all data in an accessible format
• Prepare appropriate documentation (Confidentiality Agreement and draft Farmout or Sale/Purchase
Agreement)
2. Marketing
• Use AIDA (“Attract Interest Desire Action”)
• Review and approach potential “farmees”
• Put together a data room (this could be “virtual”)
3. Engagement
• Man the data room and “field” questions
• Review and negotiate the various deal offers
4. Closing
• Negotiate Farmout Agreement and Sale & Purchase Agreement
• Finalise and close
5. Post-Closing
• Obtain all necessary approvals
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4. Planning your farmout
n Why are you doing this?
Budgetary?
Timing?
Lack of appropriate expertise?
Portfolio optimization (risk management)
n What do you need?
Seismic/well
Back costs
n How long do you have?
n What is the value of your project?
n Who is the ideal partner?
n Who will run your process?
n Prepare budget & timeline for the
Farmout
n Documents
Term sheet/HOA
Prepare CA
n Are there any barriers?
Regulatory or partner?
n Data
Collate all data
Put in appropriate format
n Teaser preparation
n Marketing methodology – “AIDA”
Limited
Public
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5. Marketing
n Redefine your ideal
“farmee” or Joint Venture
partner
n Access appropriate Market
n Prepare and distribute
Teaser
n Prepare Information
Memorandum
n Prepare Website/social
media/ public forums
n Set up Data Room
Obtain approvals
Location
Hardware
Software
Allocate appropriate
personnel
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6. Engagement
n List and prioritize
candidates
Identify key personnel
n Send CA (or NDA)
n Run Data Room and field
questions
n Negotiation
Planning
Engagement
n Sign Term Sheet/LOI
n Approval
n Farmout Agreement/SPA
Draft/negotiate
Finalize, ready for approvals
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8. Post-Closing
nAssignment and Change of Control approvals
from Regulators
nNovations to Licence documentation /JOA
nFinalize all Conditions Precedent
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9. Contact Peter Cockcroft
If you need further information, please contact me at
LinkedIn or peter@2penergy.com
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