The JV agreement shall specify its first JV leader.

The JV leader is the official representative of the joint venture. All JV dealings―at least as far as the administrator is concerned―are done through the leader. This gives the leader a veto power.

The JV leader usually has greater influence in the direction of the JV than his or her nominal power suggests. The leader has substantial influence where, when, and how deep the JV shall drill wells and is usually quite instrumental in working up the plays.

Non-leaders can only make suggestions to the leader.   

Become a Joint Venture Leader Being a joint venture leader allows you to steer oilfield development in directions a little more conducive to your goals―while using other people's money.

A joint venture leader's position has its drawbacks:

• The other JV partners are expecting certain results.
• JV leaders are expected to be dealmakers: bringing the various partners together and working with the administrator.
• JV leaders should manage their personal cash flow lest they jeopardize JV opportunities.
• JV leaders are subject to the fine for shotgun deals if any proposal they present to the administrator falls apart.

To compensate for the JV leader's woes and burdens, the JV agreement must specify a certain percentage of the revenue go to the leader. This is known as the Leader's Royalty.

After the 30-day term is over, the JV leader can be replaced by an impeachment process brought on by two or more JV partners who have at least 25% of the voting power. They make a request to the administrator for an election for a new leader. In their request, they shall nominate a candidate to replace the current leader.

The administrator shall conduct an election between the incumbent and the nominee. JV partners shall have three OF Days to cast their vote.

To replace the leader, the same quorum must be used as specified in the drilling decision and at least 50% of the votes cast must go towards the nominee (i.e., the nominee wins a  tie vote). The current JV leader can vote for himself.

A former JV leader still holds his share of the JV as before. He or she loses, however, the leader's royalty.

Replace Your Leader . . . . . . if you think he is not moving JV assets fast enough or in the wrong direction.  If the JV leader becomes an inactive financier, don't waste time to fire him. But if the 30-OF Day period is not over, you will have to wait.

After a JV leadership election, the winner cannot be challenged for leadership until another 30 OF Days has transpired. 

The JV Leader can resign at any time. He can then name his replacement who shall carry out the original term of office. When a JV leader resigns, he loses the the JV leader royalty to the new leader.

After the term is over, the new leader can be challenged.

Trusting Your JV Leader  If you are not a JV leader, you may occasionally not like some of the details your leader has negotiated. For example, you might think the fees for the drilling contractor are a little too high. Sometimes it's best to assume that the JV leader has done the best he could―and you might not have done any better if you had been the leader. And by trying to save a few dollars on your leader's negotiated proposal, you might cancel the project and have to wait another 5 or 15 OF Days for another proposal to come through. This delay may not be worth it. Voting "yes" helps keep the peace within a joint venture. And peaceful JVs should make more money than quarreling JVs.