Flag farmout clauses against the federal lease transfer rules
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- In the joint operating agreement or farmout, flag a clause that assigns a separate zone, deposit, depth, formation, specific well, or part of a legal subdivision, or that states the transferee's rights are recognized before the authorized officer approves the transfer. Quote the clause and the page. Do not say the clause is effective.
- What the lawyer must review
- 43 C.F.R. 3106.10(c) provides that an assignment of a separate zone, deposit, depth, formation, specific well, or of part of a legal subdivision will be denied. Paragraph (f) provides that the rights of the transferee to a lease or an interest in it will not be recognized by the Department until the transfer has been approved by the authorized officer. Section 3106.71 provides that the BLM will not approve an assignment of record title or a transfer of operating rights if any party in interest is not a qualified lessee or if the bond is insufficient, and that approval is for administrative purposes only and does not warrant or certify title. 30 U.S.C. 226 is the leasing statute for the federal oil and gas lease the instrument may affect. The lawyer decides whether any flagged clause is a transfer that must be filed and whether it matches the regulation. The flag does not decide that.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Potential support includes preparing preliminary structure or wording and identifying points for review. Confirm the tool’s capability and permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Check the current court or regulator requirements, prescribed form and attachments for the intended document and filing.
- Review operative clauses in the complete document, including definitions, cross-references, schedules and inconsistencies with the instructions.
- Verify the applicable jurisdiction and the version of each relevant law, rule or instrument in force at the material time.
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.