Operating Alongside Cash Strapped Co-Working Interest Owners

In the midst of the COVID-19 pandemic and plummeting oil prices, oil and gas operators are living through one of the most capital-constrained environments in memory. These developments, on top of what were already short-of-ideal conditions for oil and gas E&P companies, will force operators to confront not only their own capital shortfalls, but also those of their co-working interest owners. Given these conditions, operators and non-operators alike would be well served to review the particular pressure points under the 1989 A.A.P.L. Model Form Operating Agreement ("1989 JOA")  in light of a cash-strapped environment, in particular: (i) the provisions in relation to liens on the parties' interests in the contract area, (ii) the other remedies provided to address a default by a working interest owner, (iii) other possible commercial resolutions to address a party's desire to delay or minimize capital expenditures, and (iv) the impact of the "Other Operations" clause on