TeachMeFinance.com - explain Farm out (in) arrangement
Farm out (in) arrangement The term 'Farm out (in) arrangement' as it applies to the area of energy can be defined as ' An arrangement, used primarily in the oil and gas industry, in which the owner or lessee of mineral rights (the first party) assigns a working interest to an operator (the second party), the consideration for which is specified exploration and/or development activities. The first party retains an overriding royalty or other type of economic interest in the mineral production. The arrangement from the viewpoint of the second party is termed a 'farm-in arrangement.''.
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