What is a Carrying Party?

A carrying party is the party that agrees to pay for the share of a carried party in a project. In this situation, the interest of the carried party is shifted to the carrying party until the carrying party has earned back the payment that it made on behalf of the carried party, plus a penalty payment that is specified in the underlying joint operating agreement. Once the carrying party has received these amounts, the carried party can resume its interest in the property. This situation commonly arises in the management of jointly-owned oil and gas leases.