Licence assignments and relinquishments
Licence Assignments and Relinquishments
A company that is party to a licence may wish to sell its interest, or a part of it, to another company. It requires the NSTA ’s prior consent to do so.
If the licensees request to relinquish the acreage on the licence, before agreeing to this the NSTA will verify that all wells within the licensed area have been plugged and abandoned.
Here is a downloadable copy of The NSTA Guidance on the Onshore Regulatory Regime. This guidance, which consolidates previously available guidance, sets out how the NSTA will normally consider stated matters and is not a substitute for any regulation or law and is not legal advice.
A company that is party to a licence may wish to sell its interest, or a part of it, to another company. It requires the NSTA’s prior consent to do so.
Any transaction in which one or more companies enters a licence, or one or more companies withdraws from it, is referred to in this guidance as a licence assignment.
Licensees must meet certain financial criteria to demonstrate that they have the financial capacity to exploit the exclusive rights granted by the licence. (See financial guidance).The NSTA will consider any assignment made without prior consent as a very serious breach of the licence, and as grounds for immediate revocation of the licence or to reverse the assignment using powers granted in the Energy Act 2008. This applies equally to assignments between unaffiliated companies, to assignments between sister companies within a single company group, and to the withdrawal of a company from a licence.
If there are no reasons to withhold it, the NSTA will consent to the assignment for execution by the applicant. The NSTA requires notification of execution (in the form of an Execution Deed) so that accurate records can be maintained. The NSTA will not consider an assignment to be effective until it is satisfied with the validity of the documentation.
Please note that as of 22 July 2019 the Open Permission (Operating Agreements) dated 26 April 2012, which concerned assignments of beneficial interests in Landward Petroleum Licences, has been revoked by this Notice.
If the licensees request to relinquish the acreage on the licence, before agreeing to this theNSTA will verify that all wells within the licensed area have been plugged and abandoned.
There are two ways in which a licensee can give up acreage on a licence:
- A ‘surrender’ of part of the licensed area while the licence continues over the remaining area
- A ‘determination’ of the entire licence. The surrender of acreage from a licence does not remove any company from a licence, even a company that is left with no beneficial interest under a Joint Operator Agreement (JOA). The withdrawal of such a company must be implemented separately by an assignment
A Relinquishment Report is required for any significant area surrendered or determination of the entire licence (see further details on Relinquishment Report guidelines).
An operator may submit a licence relinquishment application at any time to surrender or determine acreage. Such applications are processed through the UK Energy Portal using the PEARS User Guidance. For further information please refer to Licence relinquishment guidance.