Nostarch, there are apparently some clauses in the Operations Agreement that may change your thinking a little.
While desert fishing I stopped by a coffee shop and thought I recognized a fishing buddy from up north. Sure enough, it was one of my old time favorites and a guy who knows the story behind the original JV Agreement.
I asked him what he thought about the APC caused delay at ELH#4 and ELH#9 and how long it might take before the situation is resolved.
HIS ANSWER BLEW ME AWAY!!
He advises that "the Joint Operating Agreement (JOA) allows the Operator to make "a lien and statement of claim", against those parties who are in arrears. He was not sure of the extent and of the time frame in their joint venture billings.
Apparently there is also a proviso in the JOA, similar to a "Sole Risk" clause, (which is also present in the agreement). This provision states that the Operator,upon advising the parties to the JOA of an Operations Notice including certain work,is to commence such work within 90 days.
THE 90 DAY CLAUSE IS VERY IMPORTANT!! WHY?
If after 90 days, the Operator has not commenced work per the Operations Notice, then ANY other JV can put forth THEIR OWN Operations Notice and take over AT LEAST that phase of the work as specified in the Operations Notice.
In effect, the party serving the Operations Notice, would become the Operator for at least that phase of the work. IE- well completion and testing.
What the ramifications are vis-a-vis the Operatorship after completion of that phase of the work, he was not sure.
Based on the notice requirement explained above it is his understanding that the 90 day period of the Operations Notice concerning completion of #4 well, will expire sometime in EARLY MAY which forces APC to act SOON, or risk having one of the other JV's step forward and assume the operatorship.
The questions for today.....WILL any financially sound JV that has the necessary expertise, step forward with an Operations plan to complete and test #4.
Or, will JUST THE POSSIBILITY of this taking place, motivate APC to commence work on #4 before expiration of the 90 period? There are a ''few'' (read perhaps ALL'' JV partners who are more than a little miffed at APC's ELH track record. IMHO, Mr. Walsh and his team at ELK Point have a great opportunity to step in, now that the real ''pressures'' downhole are better understood. After all, they were the first to bring gas and condensate to SURFACE. Doubt they would make the same mistake twice. Or how about Paramount? Or the JV's retaining an independant operator.....say OXY ;), to show Anadarko how to operate at ELH?
The key clause, in the operating agreement is the 90 day commencement. I'm told APC advised the JV's of its intent to perf and test ELH#4, around the second week of February. If true, the 90 day expiration would be.......hmmmmmmm....BEFORE May 15th.
You are correct when you say there is NO FREE RIDE but that also applies to the Operator and APC is on pretty shakey grounds, based on their performance to date AND the 90 day clause.
We shall see, but don't think for a second that any JV member is going QUIETLY. |
