Food For Thought1 Jun 2026 17:22
These are the general timelines for Farm In’s bit of course can differ quite a bit dependent on the complexity however with all parties aligned including the Jamaican Government then we should be in a good position.
Phases and Durations
• Negotiation and Agreement Signing (Heads of Agreement/LOI to Binding Farm-In Agreement):
This often takes 4–12 weeks (or longer for complex international deals). Simple domestic U.S. onshore deals can move faster with letter agreements, while majors (with rigorous due diligence, internal approvals, and risk committees) extend this. Negotiations cover interest percentages, carries, obligations, and conditions precedent.
Conditions Precedent and Closing/Assignment:
After signing, closing frequently depends on government approvals, partner consents (JOA parties), regulatory filings, or title confirmation. This adds 1–6 months commonly. In some jurisdictions (e.g., certain African or Southeast Asian blocks), approvals can stretch longer. Interest may transfer immediately upon closing or upon “earn-in” (e.g., after drilling).
Earning the Interest (Fulfillment of Obligations):
For “drill-to-earn” structures (very common), the farmee must complete the well(s) within agreed deadlines (e.g., spud by a set date, drill to total depth). Drilling and completion can take 30–90 days per well onshore, longer offshore. The full earn-in might span 6–24 months if phased or multi-well.
Overall from initial contact to “fruition” (interest earned and operations underway): Industry sources suggest 4–7 months (16–28 weeks) for typical international upstream farm-ins, and up to 9–14 months for more complex FID-stage or LNG-related deals. Domestic deals can be quicker but still often 3–9 months end-to-end.
Factors Affecting Timeline
• Jurisdiction and Regulatory Hurdles: High in places requiring ministerial/government approval.
• Deal Type: Cash + carry deals close faster than pure drill-to-earn.
• Prospect Maturity: Exploration deals may have tighter licence deadlines; appraisal/development deals involve more technical due diligence.
• Party Dynamics: Majors move deliberately due to governance; smaller farmors may push for speed to meet commitments.
• Market Conditions: Booms accelerate activity; downturns slow it.
Real-world note: Many deals start with non-binding letters of intent or teasers, involve data rooms, and require multiple rounds of revisions. Delays often stem from approvals or financing rather than pure negotiation.
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