I guess for non-oil and gas practitioners, what the terms “farm-out” and “farm-in” mean is not obvious. It would seem that these notions of art come from a nineteenth-century American practice, where sharecroppers had the opportunity to earn a living by working land for peasants in exchange for a share of the yields of the harvest. An obvious difference between the acquisition of shares and a farm-in is that, when acquiring shares, the buyer buys within the target company everything that may include a number of subsidiaries involved in a number of activities, with the exception of oil and gas exploration and production, its tax history, assets and liabilities, etc. In other words, he buys the lot. Generally speaking, companies operate for reasons opposite to those of agriculture. One of the reasons for this is that the buyer has means and a lack of surfaces and perspectives, and conversely, the seller has surfaces and lacks means. In rejecting its plea, the Commission stated that the fact that the Frustrated Contracts Act had never been negotiated was irrelevant: in the present case, the procedure in the United Kingdom was based on a law which existed before the Farm-In Agreement and of which it can therefore be assumed that the parties to that agreement were aware of it. In many agricultural agreements, deadlines are provided for the producer. Failure to perform commitments within the specified period may lead the producer not to receive interest or to reduce the interest earned.
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