Unitisation and unitisation agreements

interests, and so this will usually be tied into the redetermination clause (if there is
one). The AIPN model agreement provides for changes in the unit area and any
necessary redeterminations.
It may be that, as drilling progresses, it turns out that the field underlies areas
which are outside the licence areas already held by the licensees. It may even be that
a third party is the holder of a licence which overlaps the field area. Bringing
additional licence areas and/or third parties into the unitisation poses such a
significant change to the agreement that it would necessarily involve a complete
renegotiation of the agreement. This scenario is unlikely to be dealt with in a typical
unitisation agreement.
7.7

Unit operator
Similarly to a joint operating agreement, a unitisation agreement will provide for the
appointment of a unit operator to have overall responsibility for all unit operations.
The rights and duties of the unit operator under the agreement may include:
a general duty to carry out all operations in accordance with good industry
practice, in accordance with all relevant laws and consents, and in
accordance with the requirements of the licences/concessions;
a duty to follow the directions of the operating committee (see below);
a right to employ sub-contractors to carry out work or services relating to unit
operations on the basis that the unit operator remains responsible for the
unit operations and liable for acts and omissions of such agents and
contractors;
a duty to pay and discharge all costs and expenses incurred by the unit
operator and keep accounts in accordance with the accounting procedure set
out in the agreement;
a duty to prepare programmes and budgets, implement such programmes,
and provide the other parties with reports, data and information concerning
the unit operations; and
a duty to obtain all governmental consents and comply with any
governmental directions relating to the unitisation and unit operations.

7.8

Operating committee and decision making

The agreement will also provide for an operating committee, to supervise the unit
operators activities. The operating committee will generally be made up of
representatives from each party. Although a unitisation agreement is between two (or
more) groups of licensees, the agreement will usually give each individual party
voting rights. Each partys voting rights are determined by the extent of its tract
participation interest (unit equity). To ensure that there is no excessive dominance
by one group, it is common to provide that some, if not all, decisions must be
supported by at least one licensee from each group.

7.9

Sole risk operations

As with sole risk operations under a joint operating agreement, sole risk operations
under a unitisation agreement involve a party undertaking drilling work at its own

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