OT30048 - Capital Gains

Undeveloped Area. Work Programme Obligation.

TCGA92\s194(2)(b) refers to an obligation to undertake exploration work or appraisal work in the area (or part of it) covered by the licence disposed of, as modified by TCGA92\s196(4) if appropriate.

The phrase "obligation to undertake" is intended to cover all cases where the farmer-in commits himself to bear his and the farmer-out’s share of the costs of exploration or appraisal work carried out after the date of the farm-out agreement. It should not be read as implying the direct responsibility for drilling operations that the licence operator would have and it is irrelevant that the farmer-in is not on the licence at the time the work is performed.