Farmout Cost Clause Samples

Farmout Cost. The Farmee shall earn a 1% working interest, before and after payout, up to a maximum of a 6.48148% working interest, in the Lands for each $54,000 of expenditures incurred by the Farmee: (a) in oil and gas exploration activities on the Lands, including, without limitation, seismic studies, reworking of existing ▇▇▇▇▇, drilling and surveying; and (b) rental payments made in respect of the Lands; provided that the Farmee’s working interest in the Lands, before and after payout, shall be subject to a 9.5% royalty and government royalties. All expenditures incurred in respect of the Lands following execution of this Agreement by the Farmee shall be at the expense of the Farmee, provided that on the Farmee earning a 6.48148% interest in the Lands, all additional expenditures to be incurred in respect of the Lands shall be incurred in proportion to the working interests in the Lands.