A contract governing the relationship and responsibilities between co-owners of an oil and gas project, particularly between the operator and the working interest partners.
A Joint Operating Agreement is a legal contract between the working interest owners of an oil and gas project, detailing each party's rights and obligations. It typically names the operator (responsible for day-to-day operations) and outlines how decisions are made, how costs are shared, and how revenues are distributed. The JOA also covers procedures like proposing new operations, approving budgets (through AFEs), cash calls for expenses, and handling defaults. In essence, the JOA ensures clarity and coordination among multiple investors or companies jointly developing a well or field.
For investors in joint drilling ventures, the JOA provides transparency and control mechanisms. It helps protect their interests by formalizing how the project is managed and how each investor participates in decisions and cost-sharing.
