Legal Definitions - farmor

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.