The Ins and Outs of Nonop Working Interests

Companies active in the oil and gas and minerals spaces alike are looking at a variety of strategies to optimize their businesses, spurred by the volatility in the oil market in recent years.

Some companies have pursued both E&P and the acquisition of mineral leases or are exploring hybrid approaches that tie both together. Chris Cottrell, an associate at law firm Winston & Strawn, cited Black Stone Minerals and Viper Energy Partners as examples of such hybrid approaches that have emerged in recent years.

Some companies have opted to focus on nonoperated working interests on the E&P side of their businesses while also engaging in activity on the minerals side. Such a focus on nonop interests comes with certain risks but also certain opportunities.

Cottrell told Hart Energy that the lack of control was one of the main challenges for nonop players.

“You don’t have control over what the operator wants to do with respect to development,” he said. “The most typical situation is the operator proposing the project, and you just have the right to consent or not consent to it.”