Types of agreements in exploration & production of oil & gas that Microsource Group of companies closes with subsectors depending on the project:
In typical oil and gas Concession Agreement, oil producing countries or a relevant administrative agency grant the contractors to operate petroleum projects and the right to develop the projects in exchange for a stream of payments or payments in-kind. This government revenue stream may take several forms, but typically includes one or more of the following: Fixed rents, Royalties (based on sales), Profit overrides (effectively reducing the upside potential to sponsors), and Taxes (Income and Tariff). Through our expertise and wide network we can provide all commercial, financial and technical services for entering into and fulfilling this agreement. Our services include
Estimating potential risks
Estimating benefits of closing this contract
Finding a partner, investor, etc.
Providing financial services
Providing the ground for closing the contract with governmental or private companies
Production Sharing Agreement (PSA)
“The PSA is a contractual arrangement between foreign contractors or FOC and a designated state enterprise – National Oil Company (“NOC”), authorizing the contractors to conduct petroleum exploration and exploitation” within a certain area in accordance with the rules and conditions of the agreement. The PSA is a risk contract under which the FOC receives compensation for cost and profit in the form of hydrocarbons and “the FOC take them as earnings in their accounting system and then the hydrocarbons that are subject to be taxed by the pertinent tax authority. We can provide our clients with well-considered commercial and technical services throughout all phases– from idea to implementation – based on our comprehensive experience for closing this contract.
Joint Ventures (Operating) Agreement
Any association of two or more entities, private or public companies, or a combination of private and public may be identified as a Joint Venture (“JV”). Generally a joint venture is composed of contractors and a National Oil Company (“NOC”). Also, it is assumed that the underlying contract is mostly PSA issued to the contractor by the government. Contractor and NOC form a JV company on a 50/50 basis. The contractor carries NOC (pays all of the costs) through the minimum exploration program under the PSA. Management and other activities required by the PSA are conducted by the JV. Microsource provision of JV agreement to the oil and gas industry comprises technical and commercial analyses and services to optimize and develop this agreement in this field.
Under the service contract arrangement, the service Company bears all of the cost of exploration like that of the contractor’s relationship with an oil producing country under PSA. If production ensues, the contractor recovers its costs from production and from a fee per barrel of oil produced thereafter by the contractor. Our highly skilled teams will support you through all phases and provide all the technical and financial services for this agreement.
Farm out Agreement
The International Farm out Agreement is based on one party assigning the shares or interests of rights on a certain oil and gas development project to a second party. Normally, “when a party assigns the rights, partners of the project may elect to object the assignment or to have priority right to acquire the interests before assignment to a second party. Based on our expertise in the oil and gas industry, we are able to offer our clients expert assistance for entering into and fulfilling this agreement.
Pure Service Contracts
A pure-service contract is an agreement between a contractor and a host government that typically covers a defined technical service to be provided or completed during a specific period of time. The service company investment is typically limited to the value of equipment, tools, and personnel used to perform the service. In most cases, the service contractor's reimbursement is fixed by the terms of the contract with little exposure to either project performance or market factors. Payment for services is normally based on daily or hourly rates, a fixed turnkey rate, or some other specified amount. Payments may be made at specified intervals or at the completion of the service. Based on our understanding and decades of experience in oil and gas industry our team of oil and gas provides all commercial, financial and technical services for entering into this agreement.
Risk Service Contracts
(RSCs) and “Pure Service Contracts” (PSCs). The distinction between the two is blurred, however. In both the RSCs and PSCs, the FOC agrees to provide services and knowhow, and to supply materials. The difference between the two, according to a number of researchers, lies in the type and method of remuneration. With our high quality information, capabilities and our experienced team of oil and gas, we will help you to enter to this agreement and provide all the necessary services for closing risk service contracts.
Buy Back Contracts
It is a business arrangement whereby one party sells inventory to a second party, with the promise to repurchase the inventory at a future point in time. As part of a buyback agreement, the selling party is able to finance its inventory without reporting either the liability or asset on the company's balance sheet. This type of transaction occurs between two parties. The first party "sells" their inventory to the second party, with an explicit promise to buy back the inventory at a predetermined price over time, or at a future point in time. . Based on Microsource’s solid understanding of the oil and gas industry, we are able to offer our clients expert assistance for entering into and fulfilling this agreement. Our services include: Estimating potential risks, estimating benefits of closing this contract, finding a partner, investor, etc., and financing, providing the ground for closing the contract with governmental or private companies and beyond.