Because exploration costs are high, oil companies often co-operate. A typical oil concession could be held by five different companies with 20 percent each in the licence. The company first awarded the licence is usually inviting other companies to participate. Invited companies thereafter pay for all or for part of the undertaken work commitments. In return, they receive part of potential future earnings. This is called to “farm out” or “farm in”. The company with the operating responsibility, called the operator, can either carry out the work themselves or acquire the services on contract.
