Introduction
Disputes can become very complicated when two energy companies
enter into a joint operating agreement and then proceed to operate
in accordance with a completely different set of rules. The recent
case of Eon Energy Ltd v Ferrybank Resources Ltd,1
illustrates this point. The case represents a cautionary tale for
those tempted to treat an operating agreement as a mere formality.
The facts of this case are convoluted, but the key lesson learned
is simple: in the event of a dispute, signed agreements will form
the primary basis for determining the rights and duties of the
parties even if their conduct largely deviates from the
agreements.
Facts
Ferrybank Resources Ltd. (Ferrybank) and Eon Energy Ltd. (Eon)
(collectively, the Parties) entered into a Joint Operating
Agreement (JOA) confirming their respective working interests in
the petroleum substances of a number of wells (90% for Eon, 10% for
Ferrybank). Despite being the minority owner, Ferrybank
