Joint Operating Agreement (JOA)

Definition - What does Joint Operating Agreement (JOA) mean?

A Joint Operating Agreement, abbreviated as JOA, is an agreement between two or more operators where they collaborate to share their resources and expertise to explore, develop and produce hydrocarbons from multiple leasehold properties. It is one of the most important and commonly used agreements in the oil and gas industry. The joint operating agreement acts as a joint venture (JV) between various operators who sign this agreement. The operators share profits as agreed in the JOA.

Petropedia explains Joint Operating Agreement (JOA)

Oil and gas operators which jointly undertake a common task of exploring, developing and exploiting leasehold properties in pooled acreages or multiple areas must use a joint operating agreement as the underlying contractual framework of their joint venture. The parties in the JOA can be broadly classified as either:

  • An operator or
  • A Non-operator

An operator has a working interest on a lease and has the maximum interest in the terms and conditions of the JOA. The operator is responsible for all the E&P activities on a lease. All other parties which do not indulge in the E&P activities but are somehow associated to the operator through the JOA are considered as non-operators, they include investors, financial institutions, etc.

There are various JOA’s that are followed in the Oil and Gas industry which specify and detail different features of the JOA, such as:
  • American Association of Petroleum Landmen 610 (AAPL)
  • Association of International Petroleum Negotiators 2002 (AIPN)
  • Canadian Association of Petroleum Landmen 2007 (CAPL)
  • Oil and Gas UK Standard JOA 2007 (OGUK)

All these various JOA’s has some common terms which are as follows:

  • Duration of the Agreement
  • Parties to the Agreement
  • Parties participating Interests
  • Scope of Work
  • Exclusive Operations
  • Designated Operator
  • The Joint Operating Committee
  • Cost Control and Contracting
  • Hydrocarbon Allocation
  • Hydrocarbon Lifting and Disposal
  • Transfer of Interests
  • Withdrawal from JOA
  • Liabilities
  • Decommissioning
  • Default
  • Dispute resolution
  • Accounting procedure
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