Legal Definitions - farmoutee

Definition: A farmoutee is a person or company that is assigned a lease for the purpose of drilling a well in the oil and gas industry. They are also known as farmees or farminees.

Example 1: XYZ Oil Company leases a piece of land for oil and gas exploration. They do not have the resources to drill a well, so they assign the lease to ABC Drilling Company. ABC Drilling Company becomes the farmoutee and is responsible for drilling the well.

Example 2: John owns a small oil and gas company and wants to expand his operations. He finds a lease that has already been assigned to a farmoutee. John negotiates with the farmoutee to become a partner in the drilling project.

These examples illustrate how a farmoutee is assigned a lease for the purpose of drilling a well. In both cases, the original lessee did not have the resources or desire to drill a well, so they assigned the lease to a farmoutee. The farmoutee then becomes responsible for drilling the well and may partner with other companies to complete the project.