Unit or cooperative development and operation agreements,hearings--petition, contents--findings, effect of--order,contents--unit expenses, how charged--enlarged units, howtreated.
259.120. 1. A voluntary agreement for the unit orcooperative development and operation of a field or pool, inconnection with the conduct of repressuring or pressuremaintenance operations, cycling or recycling operations,including the extraction and separation of liquid hydrocarbonsfrom natural gas in connection therewith, or any other method ofoperation, including selective production methods, injection ofwater or other fluids, and including but not limited to thermalor combustion processes, is authorized and may be performed andshall not be held or construed to violate any of the statutes ofthis state relating to trusts, monopolies, or contracts andcombinations in restraint of trade, if the agreement is approvedby the council as being in the public interest, protective ofcorrelative rights, and reasonably necessary to increase ultimaterecovery or to prevent waste of oil or gas. Such voluntaryagreements bind only the persons who execute them, and theirheirs, successors, assigns, and legal representatives.
2. Where a unit or cooperative plan of development andoperation has been submitted to the owners of interests in afield or pool and one or more of such owners fails or refuses toexecute the applicable unit agreements for such plan, then, uponthe filing of a petition as hereinafter provided, the council,after notice, shall hold a public hearing to consider the needfor the operation as a unit of an entire pool, or any portionthereof, to prevent waste, to increase ultimate recovery of oiland gas and to protect correlative rights. The petition shallcontain the following:
(1) A description of the proposed unit area;
(2) A statement of the nature of the proposed unitoperation;
(3) Conformed copies of the applicable unit agreements,which may be composites of executed counterparts. The petitionmay be filed by any one or more of the owners who have executedthe applicable unit agreements.
3. If, after hearing and considering the petition andevidence offered in support thereof, the council finds that:
(1) The proposed unit plan has been agreed to by persons,who, at the time of filing of the petition, owned of record legaltitle to at least seventy-five percent interest in the right todrill into and produce oil and gas from the total proposed unitarea and by persons, who, at that time, owned of record legaltitle to at least seventy-five percent of production payments,royalty and overriding royalty payable with respect to oil andgas produced from the total proposed unit area, and that
(2) Unit operation of the pool, or any portion thereof,proposed to be unitized, is reasonably necessary to preventwaste, to increase ultimate recovery of oil and gas and toprotect correlative rights, and that
(3) The value of the additional oil and gas to be recoveredfrom the proposed unit area as a result of the proposed unitoperation will exceed the additional cost incident to conductingsuch operation, it shall issue an order requiring unit operationin accordance with the terms of the applicable unit operatingagreements. Such order and the unit plan shall, thereafter, beeffective as to and binding upon each person owning an interestin the unit area, or in oil and gas produced therefrom or theproceeds thereof.
4. The order requiring unit operation shall be fair andreasonable under all circumstances and shall include:
(1) A description of the unit area;
(2) An allocation, upon the basis agreed upon by theprovisions of the unit applicable agreements, and found by thecouncil to be fair and equitable to each separately owned tractin the unit area, in that under the allocation each separatelyowned tract receives its fair share of all of the oil and gasproduced from the unit area and not required or consumed in theconduct of the operation of the unit area or unavoidably lost;
(3) A provision for the credits and charges to be made inthe adjustment among the owners of the unit area for theirrespective investments in wells, tanks, pumps, machinery,materials and equipment contributed to the unit operation. Thenet amount charged against the owner or owners of a separatelyowned tract shall be considered expenses of unit operationchargeable against such tract;
(4) A provision that a part of the expenses of unitoperation, including capital investments, be charged to eachseparately owned tract in the same proportion that the tractshares in the unit production. The expenses chargeable to atract shall be paid by the person or persons who, in the absenceof unit operation, would be responsible for the expense ofdeveloping and operating such tract;
(5) Designation of the unit operator and the time at whichthe unit operation shall commence; and
(6) Those additional provisions, not in conflict with, orinconsistent with, the applicable unit agreements, which thecouncil determines to be appropriate for the prevention of wasteand the protection of all interested parties.
5. The obligation or liability of each owner in the severalseparately owned tracts for the payment of unit expense shall atall times be several and not joint or collective and in no eventshall an owner of the oil and gas rights in the separately ownedtract be chargeable with, obligated or liable, directly orindirectly, for, more than the amount apportioned, assessed orotherwise charged to his interest in such separately owned tractpursuant to the plan of unitization.
6. The council, upon the filing of a petition in a formcomplying with the requirements of subsection 2 of this section,may, after notice and hearing, require unit operation of a pool,or portion thereof, when the unit area newly established embracesa unit area within the same pool established by a previous orderof the council. In each such case the petition shall beaccompanied by a copy of the proposed unit agreements withrespect to the operation of the unit as so enlarged, in the formmeeting the requirements of subdivision (3) of subsection 2 ofthis section. In each such instance the proposed unit agreementsshall be executed by persons owning interests in oil and gas inthe entire unitized area so enlarged in sufficient numbers tocomply with the requirements of subdivision (1) of subsection 3of this section; provided that, if the unit agreements then ineffect with respect to the unit area to which an additionalportion of a pool is to be added contain provisions, under theterms of which additions to the unit area may be made, theapplication for such enlargement of the unitized area need onlybe accompanied by an agreement, executed by persons owninginterests in oil and gas under the area to be added to the unitarea in numbers sufficient to comply with the requirements ofsubdivision (1) of subsection 3 of this section, for theinclusion, in accordance with the plan provided in the unitagreements involved, of the additional area to the unit area thenexisting. In either such case, such new order, in providing forallocation of unit production from the enlarged unit area, shallfirst treat the unit area previously established as a singletract, and the portion of unit production so allocated theretoshall then be allocated among the separately owned tractsincluded in such previously established unit area in the sameproportion as those specified therefor in the previous order. Inno event shall said new order alter the relative values of tractfactors of the previously established unit area, except byconsent of all parties owning interests in the tract affected.
7. An order of the council entered under subsection 6 shallbe effective as to the enlarged unit area and to all personsowning interests in oil and gas therein to the same extent as anorder entered under subsection 3, shall contain provisions withrespect to the enlarged unit area to meet the requirements ofsubsection 4, and the provisions of subsections 5 and 6 shall beapplicable to obligations incurred in the operation of theenlarged unit area.
8. The portion of oil and gas produced from the unit areaand allocated to a separately owned tract shall be deemed, forall purposes, to have been actually produced from such tract, andoperations for the production of oil and gas from any part of theunit area, conducted pursuant to the order of the council, shallbe deemed, for all purposes, to be operations for the productionof oil and gas from each separately owned tract in the unit area.
9. The formation of such a unit as provided for insubsections 2 through 9 of this section and the operation of theunit under order of the council shall not be a violation of anystatute of this state relating to trusts, monopolies, contractsor combinations in restraint of trade.
Unit or cooperative development and operation agreements,hearings--petition, contents--findings, effect of--order,contents--unit expenses, how charged--enlarged units, howtreated.
259.120. 1. A voluntary agreement for the unit orcooperative development and operation of a field or pool, inconnection with the conduct of repressuring or pressuremaintenance operations, cycling or recycling operations,including the extraction and separation of liquid hydrocarbonsfrom natural gas in connection therewith, or any other method ofoperation, including selective production methods, injection ofwater or other fluids, and including but not limited to thermalor combustion processes, is authorized and may be performed andshall not be held or construed to violate any of the statutes ofthis state relating to trusts, monopolies, or contracts andcombinations in restraint of trade, if the agreement is approvedby the council as being in the public interest, protective ofcorrelative rights, and reasonably necessary to increase ultimaterecovery or to prevent waste of oil or gas. Such voluntaryagreements bind only the persons who execute them, and theirheirs, successors, assigns, and legal representatives.
2. Where a unit or cooperative plan of development andoperation has been submitted to the owners of interests in afield or pool and one or more of such owners fails or refuses toexecute the applicable unit agreements for such plan, then, uponthe filing of a petition as hereinafter provided, the council,after notice, shall hold a public hearing to consider the needfor the operation as a unit of an entire pool, or any portionthereof, to prevent waste, to increase ultimate recovery of oiland gas and to protect correlative rights. The petition shallcontain the following:
(1) A description of the proposed unit area;
(2) A statement of the nature of the proposed unitoperation;
(3) Conformed copies of the applicable unit agreements,which may be composites of executed counterparts. The petitionmay be filed by any one or more of the owners who have executedthe applicable unit agreements.
3. If, after hearing and considering the petition andevidence offered in support thereof, the council finds that:
(1) The proposed unit plan has been agreed to by persons,who, at the time of filing of the petition, owned of record legaltitle to at least seventy-five percent interest in the right todrill into and produce oil and gas from the total proposed unitarea and by persons, who, at that time, owned of record legaltitle to at least seventy-five percent of production payments,royalty and overriding royalty payable with respect to oil andgas produced from the total proposed unit area, and that
(2) Unit operation of the pool, or any portion thereof,proposed to be unitized, is reasonably necessary to preventwaste, to increase ultimate recovery of oil and gas and toprotect correlative rights, and that
(3) The value of the additional oil and gas to be recoveredfrom the proposed unit area as a result of the proposed unitoperation will exceed the additional cost incident to conductingsuch operation, it shall issue an order requiring unit operationin accordance with the terms of the applicable unit operatingagreements. Such order and the unit plan shall, thereafter, beeffective as to and binding upon each person owning an interestin the unit area, or in oil and gas produced therefrom or theproceeds thereof.
4. The order requiring unit operation shall be fair andreasonable under all circumstances and shall include:
(1) A description of the unit area;
(2) An allocation, upon the basis agreed upon by theprovisions of the unit applicable agreements, and found by thecouncil to be fair and equitable to each separately owned tractin the unit area, in that under the allocation each separatelyowned tract receives its fair share of all of the oil and gasproduced from the unit area and not required or consumed in theconduct of the operation of the unit area or unavoidably lost;
(3) A provision for the credits and charges to be made inthe adjustment among the owners of the unit area for theirrespective investments in wells, tanks, pumps, machinery,materials and equipment contributed to the unit operation. Thenet amount charged against the owner or owners of a separatelyowned tract shall be considered expenses of unit operationchargeable against such tract;
(4) A provision that a part of the expenses of unitoperation, including capital investments, be charged to eachseparately owned tract in the same proportion that the tractshares in the unit production. The expenses chargeable to atract shall be paid by the person or persons who, in the absenceof unit operation, would be responsible for the expense ofdeveloping and operating such tract;
(5) Designation of the unit operator and the time at whichthe unit operation shall commence; and
(6) Those additional provisions, not in conflict with, orinconsistent with, the applicable unit agreements, which thecouncil determines to be appropriate for the prevention of wasteand the protection of all interested parties.
5. The obligation or liability of each owner in the severalseparately owned tracts for the payment of unit expense shall atall times be several and not joint or collective and in no eventshall an owner of the oil and gas rights in the separately ownedtract be chargeable with, obligated or liable, directly orindirectly, for, more than the amount apportioned, assessed orotherwise charged to his interest in such separately owned tractpursuant to the plan of unitization.
6. The council, upon the filing of a petition in a formcomplying with the requirements of subsection 2 of this section,may, after notice and hearing, require unit operation of a pool,or portion thereof, when the unit area newly established embracesa unit area within the same pool established by a previous orderof the council. In each such case the petition shall beaccompanied by a copy of the proposed unit agreements withrespect to the operation of the unit as so enlarged, in the formmeeting the requirements of subdivision (3) of subsection 2 ofthis section. In each such instance the proposed unit agreementsshall be executed by persons owning interests in oil and gas inthe entire unitized area so enlarged in sufficient numbers tocomply with the requirements of subdivision (1) of subsection 3of this section; provided that, if the unit agreements then ineffect with respect to the unit area to which an additionalportion of a pool is to be added contain provisions, under theterms of which additions to the unit area may be made, theapplication for such enlargement of the unitized area need onlybe accompanied by an agreement, executed by persons owninginterests in oil and gas under the area to be added to the unitarea in numbers sufficient to comply with the requirements ofsubdivision (1) of subsection 3 of this section, for theinclusion, in accordance with the plan provided in the unitagreements involved, of the additional area to the unit area thenexisting. In either such case, such new order, in providing forallocation of unit production from the enlarged unit area, shallfirst treat the unit area previously established as a singletract, and the portion of unit production so allocated theretoshall then be allocated among the separately owned tractsincluded in such previously established unit area in the sameproportion as those specified therefor in the previous order. Inno event shall said new order alter the relative values of tractfactors of the previously established unit area, except byconsent of all parties owning interests in the tract affected.
7. An order of the council entered under subsection 6 shallbe effective as to the enlarged unit area and to all personsowning interests in oil and gas therein to the same extent as anorder entered under subsection 3, shall contain provisions withrespect to the enlarged unit area to meet the requirements ofsubsection 4, and the provisions of subsections 5 and 6 shall beapplicable to obligations incurred in the operation of theenlarged unit area.
8. The portion of oil and gas produced from the unit areaand allocated to a separately owned tract shall be deemed, forall purposes, to have been actually produced from such tract, andoperations for the production of oil and gas from any part of theunit area, conducted pursuant to the order of the council, shallbe deemed, for all purposes, to be operations for the productionof oil and gas from each separately owned tract in the unit area.
9. The formation of such a unit as provided for insubsections 2 through 9 of this section and the operation of theunit under order of the council shall not be a violation of anystatute of this state relating to trusts, monopolies, contractsor combinations in restraint of trade.
Unit or cooperative development and operation agreements,hearings--petition, contents--findings, effect of--order,contents--unit expenses, how charged--enlarged units, howtreated.
259.120. 1. A voluntary agreement for the unit orcooperative development and operation of a field or pool, inconnection with the conduct of repressuring or pressuremaintenance operations, cycling or recycling operations,including the extraction and separation of liquid hydrocarbonsfrom natural gas in connection therewith, or any other method ofoperation, including selective production methods, injection ofwater or other fluids, and including but not limited to thermalor combustion processes, is authorized and may be performed andshall not be held or construed to violate any of the statutes ofthis state relating to trusts, monopolies, or contracts andcombinations in restraint of trade, if the agreement is approvedby the council as being in the public interest, protective ofcorrelative rights, and reasonably necessary to increase ultimaterecovery or to prevent waste of oil or gas. Such voluntaryagreements bind only the persons who execute them, and theirheirs, successors, assigns, and legal representatives.
2. Where a unit or cooperative plan of development andoperation has been submitted to the owners of interests in afield or pool and one or more of such owners fails or refuses toexecute the applicable unit agreements for such plan, then, uponthe filing of a petition as hereinafter provided, the council,after notice, shall hold a public hearing to consider the needfor the operation as a unit of an entire pool, or any portionthereof, to prevent waste, to increase ultimate recovery of oiland gas and to protect correlative rights. The petition shallcontain the following:
(1) A description of the proposed unit area;
(2) A statement of the nature of the proposed unitoperation;
(3) Conformed copies of the applicable unit agreements,which may be composites of executed counterparts. The petitionmay be filed by any one or more of the owners who have executedthe applicable unit agreements.
3. If, after hearing and considering the petition andevidence offered in support thereof, the council finds that:
(1) The proposed unit plan has been agreed to by persons,who, at the time of filing of the petition, owned of record legaltitle to at least seventy-five percent interest in the right todrill into and produce oil and gas from the total proposed unitarea and by persons, who, at that time, owned of record legaltitle to at least seventy-five percent of production payments,royalty and overriding royalty payable with respect to oil andgas produced from the total proposed unit area, and that
(2) Unit operation of the pool, or any portion thereof,proposed to be unitized, is reasonably necessary to preventwaste, to increase ultimate recovery of oil and gas and toprotect correlative rights, and that
(3) The value of the additional oil and gas to be recoveredfrom the proposed unit area as a result of the proposed unitoperation will exceed the additional cost incident to conductingsuch operation, it shall issue an order requiring unit operationin accordance with the terms of the applicable unit operatingagreements. Such order and the unit plan shall, thereafter, beeffective as to and binding upon each person owning an interestin the unit area, or in oil and gas produced therefrom or theproceeds thereof.
4. The order requiring unit operation shall be fair andreasonable under all circumstances and shall include:
(1) A description of the unit area;
(2) An allocation, upon the basis agreed upon by theprovisions of the unit applicable agreements, and found by thecouncil to be fair and equitable to each separately owned tractin the unit area, in that under the allocation each separatelyowned tract receives its fair share of all of the oil and gasproduced from the unit area and not required or consumed in theconduct of the operation of the unit area or unavoidably lost;
(3) A provision for the credits and charges to be made inthe adjustment among the owners of the unit area for theirrespective investments in wells, tanks, pumps, machinery,materials and equipment contributed to the unit operation. Thenet amount charged against the owner or owners of a separatelyowned tract shall be considered expenses of unit operationchargeable against such tract;
(4) A provision that a part of the expenses of unitoperation, including capital investments, be charged to eachseparately owned tract in the same proportion that the tractshares in the unit production. The expenses chargeable to atract shall be paid by the person or persons who, in the absenceof unit operation, would be responsible for the expense ofdeveloping and operating such tract;
(5) Designation of the unit operator and the time at whichthe unit operation shall commence; and
(6) Those additional provisions, not in conflict with, orinconsistent with, the applicable unit agreements, which thecouncil determines to be appropriate for the prevention of wasteand the protection of all interested parties.
5. The obligation or liability of each owner in the severalseparately owned tracts for the payment of unit expense shall atall times be several and not joint or collective and in no eventshall an owner of the oil and gas rights in the separately ownedtract be chargeable with, obligated or liable, directly orindirectly, for, more than the amount apportioned, assessed orotherwise charged to his interest in such separately owned tractpursuant to the plan of unitization.
6. The council, upon the filing of a petition in a formcomplying with the requirements of subsection 2 of this section,may, after notice and hearing, require unit operation of a pool,or portion thereof, when the unit area newly established embracesa unit area within the same pool established by a previous orderof the council. In each such case the petition shall beaccompanied by a copy of the proposed unit agreements withrespect to the operation of the unit as so enlarged, in the formmeeting the requirements of subdivision (3) of subsection 2 ofthis section. In each such instance the proposed unit agreementsshall be executed by persons owning interests in oil and gas inthe entire unitized area so enlarged in sufficient numbers tocomply with the requirements of subdivision (1) of subsection 3of this section; provided that, if the unit agreements then ineffect with respect to the unit area to which an additionalportion of a pool is to be added contain provisions, under theterms of which additions to the unit area may be made, theapplication for such enlargement of the unitized area need onlybe accompanied by an agreement, executed by persons owninginterests in oil and gas under the area to be added to the unitarea in numbers sufficient to comply with the requirements ofsubdivision (1) of subsection 3 of this section, for theinclusion, in accordance with the plan provided in the unitagreements involved, of the additional area to the unit area thenexisting. In either such case, such new order, in providing forallocation of unit production from the enlarged unit area, shallfirst treat the unit area previously established as a singletract, and the portion of unit production so allocated theretoshall then be allocated among the separately owned tractsincluded in such previously established unit area in the sameproportion as those specified therefor in the previous order. Inno event shall said new order alter the relative values of tractfactors of the previously established unit area, except byconsent of all parties owning interests in the tract affected.
7. An order of the council entered under subsection 6 shallbe effective as to the enlarged unit area and to all personsowning interests in oil and gas therein to the same extent as anorder entered under subsection 3, shall contain provisions withrespect to the enlarged unit area to meet the requirements ofsubsection 4, and the provisions of subsections 5 and 6 shall beapplicable to obligations incurred in the operation of theenlarged unit area.
8. The portion of oil and gas produced from the unit areaand allocated to a separately owned tract shall be deemed, forall purposes, to have been actually produced from such tract, andoperations for the production of oil and gas from any part of theunit area, conducted pursuant to the order of the council, shallbe deemed, for all purposes, to be operations for the productionof oil and gas from each separately owned tract in the unit area.
9. The formation of such a unit as provided for insubsections 2 through 9 of this section and the operation of theunit under order of the council shall not be a violation of anystatute of this state relating to trusts, monopolies, contractsor combinations in restraint of trade.
