TeachMeFinance.com - explain Drilling arrangement
A contractual agreement under which a working interest owner (assignor) assigns a part of a working interest in a property to another party (the assignee) in exchange for which the assignee agrees to develope the property. The term may also be applied to an agreement under which an operator assigns fractional shares in production from a property to participants for cash considerations as a means of acquiring cash for developing the property. Under a "disproportionate cost" drilling arrangement, the participants normally pay a greater total share of costs than the total value of the fractional shares of the property received in the arrangement.
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