Like the previous model in 2004, the new version of the 2019 agreement deals with the transfer of part (but not all) of the property (known as “participation”) from an upstream oil and gas facility to another. The updated version provides for a more detailed development of important provisions reflecting recent practices and also offers a wider range of alternatives for parties negotiating a farm-out transaction. As with all forms of models, and as indicated in the new guidelines, it should only be used as a guide to inform the possible structure of an agreement and not to be used dogmatically. The new model form is most appropriate in relation to an exploration asset and not as part of a development or production asset. The new AIPN Farm-out agreement covers two types of reflective structures that reflect the common transaction structures described above: a farmout contract is an agreement with an operating interest holder (“Farmor”), the farmer agrees to assign work shares to the farm in exchange for certain contractual services. Typically, these services include drilling a well to a certain depth, at a certain location, within a certain period of time, and generally require that the well be commercially produced. After the delivery of this contractual benefit, farmee would have “deserved” a contract. This transfer comes after the completion of the benefits and is subject to the reserve of a prevailing royalty interest in favour of the farmer. Agricultural agreements are one of the most widespread agreements in the oil and gas industry.
 Thank Professor Lowe in particular for his excellent article on this subject, Analyzing Oil and Gas Farmout Agreements, Sw. L.J. 759 (1987). However, there is no widely accepted model. As such, they are very different. Kanes Forms has provided several Farmout contract forms, but these have not been accepted as industry standard, and therefore each treaty farmout agreement must be fully analyzed and every term must be understood. This multi-part article will bring together commonalities and provide a framework for analyzing the various options for certain provisions. In the case of transactions in which the farmer agrees to transfer ownership of the asset in question to the farm, the parties can also verify whether all necessary consents have been obtained by third parties, but before all work obligations are fulfilled (or paid), whether the return and/or recovery for default is sufficient.