AAPL To Issue Revised Form 610-1989 Model Form Operating Agreement To Address Horizontal Wells

The American Association of Professional Landmen is expected to release a revised Form 610-1989 Model Form Operating Agreement within the next few days. It is our understanding that the revised Form will include language making the agreement more suitable for operations involving horizontal wells. This will be the first such revision in over twenty years and is a direct result of the enormous increase in horizontal drilling over the last few years.

As experienced landmen and counsel are aware, the current Form 610-1989 Operating Agreement requires numerous revisions to address situations unique to horizontal wells. The revised Form will still be applicable to vertical wells, but it will also include provisions specific to horizontal wells. In light of the proliferation of horizontal wells throughout the United States, the AAPL JOA Task Force was cognizant of revising the Form in a manner such that it could be used nationwide. The existing Form 610-1989 Operating Agreement will still be available for use once the revised Form has been promulgated.

Some of the more substantive changes to the Form include:

- Revising certain definitions in Article I (Definitions) and adding additional defined terms;

- Adding separate sub-sections addressing Spudder Rigs and Multi-well Pads, as well as revising language related to drilling and development in Article VI (Drilling and Development); and

- Revising Article XV (Miscellaneous) and Article XVI (Other Provisions).

The revised Form is intended to allow parties to reduce drafting and negotiating time so that more attention can be paid to project-specific issues in horizontal well operations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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