Legal Definitions - footage drilling contract

A footage drilling contract is an agreement between a drilling contractor and the owner or lessor of mineral rights. The contract outlines the rights and responsibilities of both parties. The drilling contractor, who owns drilling rigs and equipment, is paid a set amount per foot drilled to reach a specified formation or depth. The contractor has broad control over how to do the work, and the risk of unexpected delays and most liabilities is on the contractor rather than the lease operator.

• Footage Drilling Contract: A drilling contractor is hired to drill a well to a depth of 10,000 feet. The contract specifies that the contractor will be paid $50 per foot drilled. The contractor has control over how to do the work and assumes most of the risk for any delays or damages caused by the drilling.
• Daywork Drilling Contract: A lease operator hires a drilling rig and oilfield workers and pays an amount based on the time spent in drilling operations. The lease operator retains the right to direct drilling operations and assumes broad liability for any damages caused by the drilling.
• Turnkey Drilling Contract: A drilling contractor promises to perform specified functions for an agreed price. The lease operator has little or no discretion to control the drilling contractor and assumes little or no liability for damages caused by the drilling.

These examples illustrate the different types of drilling contracts and the varying levels of control and liability for the parties involved. The footage drilling contract places most of the risk on the contractor, while the daywork drilling contract places more liability on the lease operator. The turnkey drilling contract minimizes the lease operator's liability by giving the drilling contractor more control over the work.