OT30048 | Capital Gains: Undeveloped Areas - Work Programme Obligation

TCGA92\S194(2)(b) refers to an obligation to undertake exploration work or appraisal work in the area (or part of it) covered by the licence disposed of, as modified by TCGA92\S196(4) if appropriate.

The phrase “obligation to undertake” is intended to cover all cases where the farmer in commits himself to bear his and the farmer out’s share of the costs of exploration or appraisal work carried out after the date of the farm out agreement. It should not be read as implying the direct responsibility for drilling operations that the licence operator would have and it is irrelevant that the farmer in is not on the licence at the time the work is performed.