- Oil and Gas wells across five US onshore basins.
- Our local market knowledge and expertise offer a competitive advantage to unlock value.
- Experienced management team with combined complimentary experience of 150 years.
- Prudent team has unprecedented deal flow competitive advantage stemming from proprietary relationships.
- Texas Operator number # 681827.
- Wyoming Operator number #2726.
NON OPERATED PROJECTS FAQ
What Is A Non-Operated Project?
In a non-operated project, one company assumes the role of the operator and does field work to drill, complete and produce Oil and Gas in the area of interest. On the contrary, the non-operating company provides the capital so that both parties can be mutually benefitted. Companies entering in these contracts contribute capital and technologies to get benefits such as risk-sharing, scale, or entrance in a new play and share expected costs.
A non-operator is bound to pay their share of costs incurred during the project and will have a share in profits earned through production. Similarly, the operator company will deduct the operating expenses from the revenues, and the remaining profit will be shared between the parties as per the division order, thus creating a source of income.
What Are Other Benefits Offered By Non-Op?
Non-operated projects can help in capitalizing the Oil and gas upstream projects, synergies, and risk-sharing. One of the major benefits of non-operated asset is it gives non operator the chance to strengthen their knowledge related to a basin’s subsurface and use capital and resources effectively and efficiently to get the maximum value out of the investment.
Communication and effective planning are key to success in a non-operated project. In order to be successful, non-operators not only have to provide good assets, but it is also very important for them to plan with due diligence regarding Operators.
How Much Of Decision Making Can Be Involved With Operators On Non-Operated Properties?
Non operated partner generally doesn’t have any right in decisions related to daily operations. However, a non-op company does have the right to decisions related to production and costs incurred as per the contract between both parties.
How Is Reserves Booking Different For Operated and non-operated properties?
As a working interest owner, a company can book reserves and include an asset in its balance sheet. However, the concerned company cannot include overhead costs (COPAS) for reserves calculations of non-operated properties.
Is the Project Success Dependent On the quality Of Assets Or Operator?
Both of them are equally important. A lot of companies have been entering into non operated projects to get the benefits of oil price recovery. It comes as no surprise that since 2016, a lot of upstream non-operated deals have been in Permian Basin, Eagle Ford and Bakken.
What is COPAS?
It is an industry payment standard for the compensation of overhead costs to the operating party from the non-operating party.
What Are The Tax Regulations For Non-Operated Properties?
Tax regulations for non-operated properties are the same as operated properties. A working interest owner is allowed to deduct intangible development costs and drilling costs. US tax code considers a working interest in oil and gas well as a passive activity. Therefore, any losses sustained in relation to oil and gas production are allowed to be settled against other sources of ordinary income.
- Anyone who has a working interest can deduct specified costs such as equipment deprecation costs and utility payments.
- Losses are considered as active income and are allowed to be settled off against other sources of income.
What Questions Should A Non-Op Owner Ask Him/Herself?
- Can the asset strongly synergize with other sections of the portfolio we have?
- Is the operator going to use any specific technologies that we need to understand or master?
- Will the asset be helpful in deepening our relationship with host governments, our partners, and other stakeholders?
- Is the asset good enough to give us a feasible chance to strengthen our knowledge related to the subsurface of a basin?
- Is the asset good enough to enhance the capabilities of the staff?
Questions That Should Be Asked Related to Operator
- Is the operator enough qualified or experienced, given the asset’s subsurface characteristics?
- Are the operator and its partners on the same page related to the regulatory, commercial, and technical approach to the asset?
- How good is the operator’s record with major contractors for this kind of environment?
- Does the operator have a strong safety, health, environment, and security record and approach?
- Do you and the operator have the same approach to ethics?
- Does the operator sufficiently understand the technologies it is using?
- How good is the operator’s performance when it comes to cost, productivity, and efficiency?