The formula, however imprecise, is generally obtained by “giving and receiving” long and difficult rounds of negotiations between interested parties. With the advent of computers, interested parties are able to analyze complex formulas in a short time to determine the impact of the proposed formulas on their individual interests. While, by definition, some participating interest owners will receive more than their proportional value and some will receive less, even the losers of the finally selected formula become net winners, because hopefully total production will be significantly increased relative to the level reached by non-unit-related production. While the proportion is smaller, the cake grows and, as a result, consensus is often reached voluntarily among interested parties. An agreement of agreement contains provisions on when a redefinition should take place, including limiting the number of new provisions that can take place. However, certain unitation agreements (including some UKCS unification agreements) applicable to much smaller discoveries will determine market participation and equity interest, so that they are not subject to redefinition, since the cost of redefinition would amount to devaluing all the merits of redefining market participation. In addition, the third round concession agreement contains provisions for unit building. In accordance with paragraphs 12.1.1 and 12.1.2: if a discovery is made outside a granted area, (a) ANP notifies all other dealers concerned for the purpose of executing a unit agreement, or b) the ANP (until a dealer of the affected units is activated) negotiates a unit agreement with the dealer concerned if the discovery is in an area where there is no dealership. Doheny also illustrates the wisdom of including a gas offset provision in enterprise agreements for units, to account for the likelihood that each owner will be unable or unable to periodically absorb his assigned share of production – if the unit operator does not sell the full gas stream to the unit owners. In particular, since it applies to the production of gas in quantities, where owners may not be able to store production on site, it is quite possible that not all owners will be able to sell their entire share of production. The implementation of an appropriate accounting method, the provision of a database for overproduction and underproduction figures, the limitation of the level of overproduction and the limitation of the period during which an under-produced condition must be corrected are all things to be addressed.
In addition, pricing mechanisms should be agreed to manage cash balance, when and when they are approved, rather than leaving them to the subsequent court decision at the height of the litigation. In addition, the joint authority (competent government authority) may, either automatically or at the request of a) a licensee or b) a person legally entitled to carry out oil recovery activities in an area outside the adjacent area, which includes part of an oil basin entering the adjacent area, and any taker whose licence area includes part of the pool , to order the establishment of a single contract within a specified period of time.