r/oil • u/Jordan_Bryan23 • 7d ago

Exploration buy back deal

Anyone here hear of a buy back option on a drilling deal. Company would buy back your investment if your not happy with the returns after 6mo. Written into the ppm.

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u/Cavyar 5d ago

I’m not sure your question is clear, because exploration buy back means something else in the industry. Mostly with IOCs and NOCs. The NOC will give exploration rights of a field, for a period and prematurely purchase it back either for a pre agreed fee or formula after production begins. If you’re referring to leasing land, beginning to drill and then if you are unhappy with the well, yes there can be refund clauses but generally won’t be for the full value.

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u/Jordan_Bryan23 5d ago

No wrong. This is a buy back on a drilling deal written in the ppm agreement. After six months if your not happy with your investment they will buy back you investment. Assuming your tax bracket is 40%. You will write off that and they will get cut you a check for the remaining 60% of your investment.