Legal Definitions - gas-balancing agreement

A gas-balancing agreement is a contract between the owners of a gas well to balance the production of gas if one owner sells more of the gas stream than the others. This agreement is necessary because co-owners often sell their share of production to different purchasers, which can lead to imbalances in production.

For example, if there are three owners of a gas well and one owner sells more gas than the other two, the gas-balancing agreement would require that owner to reduce their sales so that the production is balanced among all three owners. This ensures that each owner receives a fair share of the profits from the gas well.

Gas-balancing agreements are important in the oil and gas industry because they help to prevent disputes among co-owners and ensure that everyone benefits from the production of the gas well.