Legal Definitions - contribution agreement

A contribution agreement is a contract between two or more parties in the oil and gas industry. The purpose of this agreement is to promote exploratory operations by agreeing to contribute money or property to another party if they drill a well on leases that they hold and provide the contributing party with information from tests conducted.

For example, if Company A holds leases for oil and gas exploration but lacks the funds to drill a well, they may enter into a contribution agreement with Company B. Company B agrees to provide the necessary funds for drilling the well, and in return, Company A provides Company B with information from tests conducted on the well.

Contribution agreements are beneficial for both parties. For the contributing party, it is a purchase of geological or technological information. For the party receiving the support, the contribution lessens the cost or the risk of drilling operations.

Other types of agreements in the oil and gas industry include dry-hole agreements, bottom-hole agreements, and acreage-contribution agreements.