OT30020 - Capital Gains

Farm Outs. Meaning.

A farm-out involves the disposal of a licence interest by the owner (the farmer-out) in return for consideration given by the farmer-in. Although the term "farm-out" refers to transactions where the farmer-out retains some interest in the licence directly or indirectly (e.g. a share in future production or net profits), it is often applied to disposals of the entire licence interest.