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Simple English definitions for legal terms
farmor
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A quick definition of farmor:
Term: FARMOR
Definition: A farmor is someone who leases land for oil and gas exploration but then assigns the lease to another person who agrees to drill a well. This person is also known as a farmouter or farminor.
A more thorough explanation:
FARMOR
A farmor is an oil-and-gas lessee who assigns the lease to another party, who agrees to drill a well. It is also known as a farmoutor or farmouter.
Example 1: Company A owns a lease for an oil-and-gas field but does not have the resources to drill a well. They assign the lease to Company B, who agrees to drill a well. Company A is the farmor, and Company B is the farmoutor.
Example 2: John owns a small oil-and-gas lease but cannot afford to drill a well. He assigns the lease to his friend, Tom, who has the resources to drill a well. John is the farmor, and Tom is the farmoutor.
These examples illustrate how a farmor assigns a lease to another party who agrees to drill a well. The farmor benefits from the agreement by receiving a share of the profits from the well without having to invest in drilling it themselves.