Why Do Oil & Gas Companies Do Farm-Out and Farm-In Agreements?

A farm-in has four basic characteristics. Firstly, one company (the seller) has a licence interest. Secondly, another company (the buyer) agrees to pay the seller’s costs for a particular activity, usually a well, perhaps a seismic programme. Thirdly, in return the seller transfers to the buyer part of the seller’s interest. Fourthly, the seller retains part of its interest.

Find out about:

• What comprises a farm-in / farm-out agreement?
• What motivates a company to create a farming-in or farming-out agreement? 
• What are the main types of farm-ins?