Successful Farmins and Farmouts

“Successful Farmins and Farmouts, for oil and gas professionals” is a 150-page soft cover book, written in English by Peter Cockroft and Dr. David Waghorn. Although written for the oil and gas industry, it equally applies to various forms of joint ventures, acquisitions or bidding for new tenements in the minerals and coal sector. The style is simple and straightforward, and reflects many years of hands-on experience. The main chapters are Overview, The Farmout, Joint ventures and Operating Agreements, The Role of Non-Operating partner, Deal Options, Earn-Ins and Swaps, Economics, Geological Checklist and Pitfalls. The perspective of both Farmin and Farmout parties are presented without bias.

Most of the style is simple and straight forward, such as one excerpt from the Physical Data Room as “ A member of the technical team to be in the data room, if not at the time, at least on a regular basis to answer queries, direct questions to seller’s technical personnel, and to make decisions about what data can be copied”. Occasionally the authors throw in a little bit of home wisdom and foresight, such as “One can argue that one of the most serious limits to growth of the oil industry is lack of opportunities, not shortage of capital. We simply don’t know how to grow faster. This inability to generate enough opportunities suggests that the industry is talent limited:” Another insight is “ Quite a good simple indicator of an operators competence is the time it takes to respond to a partners query; an operator that is lazy in this regard is probably lazy in most other regards too, The operator’s GM should, therefore, require his people to respond to any partner query within 48 hours, even if only to acknowledge the query and to give a date by which a full answer will be sent”. 

This book is essential reading for the CEO, but also for the professional geologist, miner (or other) who wants to develop an understanding on how the mining business develops, and may evolve over the life of a project. It is also good background reading when considering bidding on the issuance of a new tenement. See the great section on data rooms, the finer points of setting up a JV document and more.

This book can be obtained through Amazon [] for Rp 441,100.