Carried party

A carried party is an entity that does not consent to pay its share of the expenses associated with a project. When another party agrees to pay for the expenses of the carried party, it is designated the carrying party. When there is a carrying party, the interest of the carried party is shifted over to the carrying party until such time as the carrying party has earned back the payment that it made on behalf of the carried party, plus a penalty payment that is stated in a joint operating agreement. Once the carrying party has received these amounts, the carried party can resume its interest in the business arrangement.

The carried party concept is most commonly found in oil and gas arrangements where there are multiple investors in a property.

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Oil and Gas Accounting