The first step of oil exploration is to obtain an exploration license. An exploration license allows oil company owners to perform initial geological studies on specific areas of interest. The license has a duration of 5-6 years. A company that wishes to carry out oil exploration or build a "wildcat well" must fulfill certain business commitments, such as owning sufficient equipment to conduct studies and surveys in the area. The company must also be able to provide “bonuses” and “cash offers” in some cases during exploration. To fully utilize an exploration license, oil company owners must undergo a certain timeline of processes. First, the owners must apply for an exploration license from the government. The announcement of the closing of the application can vary from 6 to 12 months from the day of opening of the application. At closing, owners will have to wait another 3 months for their application to be approved or rejected. Once the government grants permits to the owners, they can carry out initial geological, geophysical and seismic studies on the affected land. These processes are commonly performed in the first to third years of exploration. In the fourth to sixth years of exploration, owners may wish to perform additional seismic work and possible exploration to gain more information from the affected area. In case no potential reservoir is found, or that particular area requires more geological studies, the owners may consider a renewal of the exploration licenses. Renewal of licenses allows owners to carry out further exploration for up to another 5 years. If a company fails to fulfill the obligation agreed in the license, it for......half of paper......ration costs and suffers any losses if the project fails. For example, a company that has already acquired a permit to perform exploration and production in an area could lease another company to perform the work. The two companies will then negotiate the share of revenue the old company would receive if the project is successful. For royalty interests, the permit owner will receive a percentage of the gross revenue or “wellhead value” from production. For net profit interest, the owner will receive a share of the net profit of production revenues. Net profit is the value obtained by deducting the expenses incurred in production from the value of gross revenues. The similarities of both of these interests mean that the permit owner does not have to pay any costs and does not participate in any decision making that occurs in the project.