From prospect to producing well – A guide
1. Partner Screening
Texas Onshore Resources (TOR) is looking for a qualified prospect creator and operator. The selection is based on previous results, honesty, integrity, business plan and the quality of the prospects.
TOR receives a prospect proposal and makes an evaluation. The proposal’s geological/geophysical merits, level of risk, costs and potential reserves are evaluated. This results in a condition for return/risk.
If TOR’s management determines that the prospect is of interest, a recommendation is made to the CEO of Texas Onshore AB. Based on the cost and risk, management suggests a working interest (WI) proportion.
TOR negotiates with the operator the conditions for participation. If the parties reach an agreement, then a participation agreement is drawn up, stipulating TOR’s degree of obligation and the operator’s performance with regard to drilling, evaluation and completion. A Joint Operating Agreement regulating operational issues is also signed.
5. Drilling Process
- The operator is responsible for making sure that all mineral lease agreements are in place.
- The rig is contracted with a subcontractor.
- All necessary documents and licenses are drawn up.
- The well is drilled and evaluated when a specified depth has been reached.
- If the well proves to not have producing/economic reserves, it is plugged again and abandoned.
- Otherwise, work with the well is completed so that it can start producing. An evaluation is also made to determine if additional drilling and development is needed.
7. Decision to Develop
A decision is made as to whether the drillings in the same area should be developed and, if so, how many wells should be drilled.