Sometimes a unitization contract between two oil field owners will require them to turn operations over to a third party because each owner has an incentive to secretly increase output.

Question

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This statement is true. A unitization contract can help prevent conflicts of interest between oil field owners by requiring them to turn over operations to a neutral third party who can ensure that each owner is adhering to their agreed-upon share of production. This can help prevent situations where one owner might be tempted to cheat by producing more than their share, which could lead to damage to the reservoir or other resource depletion issues.

Sometimes a Unitization Contract Between Two Oil Field Owners Will