Alberta Farmout and Option Agreement

Draw up a Farmout and Option Agreement for oil and gas properties with this template contract for Alberta.

• The farmor will commence drilling of the test well at its sole cost and risk. The farmee will then continue drilling to the contract depth, log and test, and either complete, equip or abandon the test well in accordance with the agreement.
• Provisions for drilling an option well if serious difficulties are encountered with the test well.
• If the interest of a party becomes encumbered, such encumbrance will be charged to and paid by that party.
• The farmee will reimburse the farmor on a per diem basis for rentals and penalties payable under the title document.
• The farmee's earned interest in the farmout lands is calculated as 100% of the farmor's interest in the producing zones, and 50% of the remainder of the lands.
• Rights and remedies of the parties in the event of default.
• CAPL PASC Accounting Procedure and specified clauses of Operating Procedure apply.