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Monday, March 19, 2012 2:23:53 PM
NXT hoped to get simple royalty contracts but now find they have to joint venture everything.
Even a simple royalty agreement would probably be problematic to administer in a high tech environment where future processes will undoubtedly be much different than forecast, however a joint venture greement is much more detailed and worse to create. JV's have to account for every expense, capital additions and revenue streams. What may seem waste today may be of value in the future so sharing all of these items often leads to arguments among partners.
I have audited many oil and gas production facility agreements, which to an outsider would seem straightforward. Reality is even in a business process that has been around for a long time, many surprises crop up that are loosely defined in the partner agreement for an auditor to argue with the facility operator. JVing a new process is guaranteed to create complications, so it could take quite a lot longer for NXT to conclude a jv agreement than a royalty agreement.
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