A Different “Slant” on JOAs: New Developments in Shale Plays and Recent Court Rulings

Since 1989 there has been a shift in the oil and gas industry from drilling vertical wells to drilling horizontal wells. This shift came about as a result of technology advances in horizontal drilling techniques coupled with the fact that drilling horizontal wells results in a smaller “footprint,” reduced surface disturbance, less drilling waste, and more efficient drainage of the target formation.2 In 1989, the American Association of Petroleum Landmen (AAPL) developed and published the fourth3 model joint operating form known as the AAPL Form 610-1989 Model Form Operating Agreement (1989 JOA).4 Although the form only uses the word “vertical” once (within the definition of “Sidetrack”), it was developed during a time when most companies were using a vertical drilling model and therefore the provisions were crafted from this perspective. At the time, the 1989 JOA was seen as the most comprehensive of all of the form joint operating agreements that had been compiled since 1956.5 Today, however, approximately [25-4] 2,700 horizontal wells are drilled per year worldwide.6 In response to the increase in horizontal drilling, the oil and gas industry is learning to adapt the 1989 JOA to a horizontal drilling model.
The focus of this chapter is twofold. First, the chapter discusses current issues facing today's oil and gas attorneys and landmen in drafting and working in the 198