State Codes and Statutes

Statutes > Utah > Title-40 > Chapter-06 > 40-6-6-5

40-6-6.5. Pooling of interests for the development and operation of a drilling unit --Board may order pooling of interests -- Payment of costs and royalty interests -- Monthlyaccounting.
(1) Two or more owners within a drilling unit may bring together their interests for thedevelopment and operation of the drilling unit.
(2) (a) In the absence of a written agreement for pooling, the board may enter an orderpooling all interests in the drilling unit for the development and operation of the drilling unit.
(b) The order shall be made upon terms and conditions that are just and reasonable.
(c) The board may adopt terms appearing in an operating agreement:
(i) for the drilling unit that is in effect between the consenting owners;
(ii) submitted by any party to the proceeding; or
(iii) submitted by its own motion.
(3) (a) Operations incident to the drilling of a well upon any portion of a drilling unitcovered by a pooling order shall be deemed for all purposes to be the conduct of the operationsupon each separately owned tract in the drilling unit by the several owners.
(b) The portion of the production allocated or applicable to a separately owned tractincluded in a drilling unit covered by a pooling order shall, when produced, be deemed for allpurposes to have been produced from that tract by a well drilled on it.
(4) (a) (i) Each pooling order shall provide for the payment of just and reasonable costsincurred in the drilling and operating of the drilling unit including, but not limited to:
(A) the costs of drilling, completing, equipping, producing, gathering, transporting,processing, marketing, and storage facilities;
(B) reasonable charges for the administration and supervision of operations; and
(C) other costs customarily incurred in the industry.
(ii) An owner is not liable under a pooling order for costs or losses resulting from thegross negligence or willful misconduct of the operator.
(b) Each pooling order shall provide for reimbursement to the consenting owners for anynonconsenting owner's share of the costs out of production from the drilling unit attributable tohis tract.
(c) Each pooling order shall provide that each consenting owner shall own and beentitled to receive, subject to royalty or similar obligations:
(i) the share of the production of the well applicable to his interest in the drilling unit;and
(ii) unless he has agreed otherwise, his proportionate part of the nonconsenting owner'sshare of the production until costs are recovered as provided in Subsection (4)(d).
(d) (i) Each pooling order shall provide that each nonconsenting owner shall be entitledto receive, subject to royalty or similar obligations, the share of the production of the wellapplicable to his interest in the drilling unit after the consenting owners have recovered from thenonconsenting owner's share of production the following amounts less any cash contributionsmade by the nonconsenting owner:
(A) 100% of the nonconsenting owner's share of the cost of surface equipment beyondthe wellhead connections, including stock tanks, separators, treaters, pumping equipment, andpiping;
(B) 100% of the nonconsenting owner's share of the estimated cost to plug and abandonthe well as determined by the board;

(C) 100% of the nonconsenting owner's share of the cost of operation of the wellcommencing with first production and continuing until the consenting owners have recovered allcosts; and
(D) an amount to be determined by the board but not less than 150% nor greater than300% of the nonconsenting owner's share of the costs of staking the location, wellsitepreparation, rights-of-way, rigging up, drilling, reworking, recompleting, deepening or pluggingback, testing, and completing, and the cost of equipment in the well to and including thewellhead connections.
(ii) The nonconsenting owner's share of the costs specified in Subsection (4)(d)(i) is thatinterest which would have been chargeable to the nonconsenting owner had he initially agreed topay his share of the costs of the well from commencement of the operation.
(iii) A reasonable interest charge may be included if the board finds it appropriate.
(e) If there is any dispute about costs, the board shall determine the proper costs.
(5) If a nonconsenting owner's tract in the drilling unit is subject to a lease or othercontract for the development of oil and gas, the pooling order shall provide that the consentingowners shall pay any royalty interest or other interest in the tract not subject to the deduction ofthe costs of production from the production attributable to that tract.
(6) (a) If a nonconsenting owner's tract in the drilling unit is not subject to a lease orother contract for the development of oil and gas, the pooling order shall provide that thenonconsenting owner shall receive as a royalty the average landowner's royalty attributable toeach tract within the drilling unit.
(b) The royalty shall be:
(i) determined prior to the commencement of drilling; and
(ii) paid from production attributable to each tract until the consenting owners haverecovered the costs specified in Subsection (4)(d).
(7) The operator of a well under a pooling order in which there are nonconsenting ownersshall furnish the nonconsenting owners with monthly statements specifying:
(a) costs incurred;
(b) the quantity of oil or gas produced; and
(c) the amount of oil and gas proceeds realized from the sale of the production during thepreceding month.
(8) Each pooling order shall provide that when the consenting owners recover from anonconsenting owner's relinquished interest the amounts provided for in Subsection (4)(d):
(a) the relinquished interest of the nonconsenting owner shall automatically revert tohim;
(b) the nonconsenting owner shall from that time:
(i) own the same interest in the well and the production from it; and
(ii) be liable for the further costs of the operation as if he had participated in the initialdrilling and operation; and
(c) costs are payable out of production unless otherwise agreed between thenonconsenting owner and the operator.
(9) Each pooling order shall provide that in any circumstance where the nonconsentingowner has relinquished his share of production to consenting owners or at any time fails to takehis share of production in-kind when he is entitled to do so, the nonconsenting owner is entitledto:

(a) an accounting of the oil and gas proceeds applicable to his relinquished share ofproduction; and
(b) payment of the oil and gas proceeds applicable to that share of production not takenin-kind, net of costs.

Amended by Chapter 324, 2010 General Session

State Codes and Statutes

Statutes > Utah > Title-40 > Chapter-06 > 40-6-6-5

40-6-6.5. Pooling of interests for the development and operation of a drilling unit --Board may order pooling of interests -- Payment of costs and royalty interests -- Monthlyaccounting.
(1) Two or more owners within a drilling unit may bring together their interests for thedevelopment and operation of the drilling unit.
(2) (a) In the absence of a written agreement for pooling, the board may enter an orderpooling all interests in the drilling unit for the development and operation of the drilling unit.
(b) The order shall be made upon terms and conditions that are just and reasonable.
(c) The board may adopt terms appearing in an operating agreement:
(i) for the drilling unit that is in effect between the consenting owners;
(ii) submitted by any party to the proceeding; or
(iii) submitted by its own motion.
(3) (a) Operations incident to the drilling of a well upon any portion of a drilling unitcovered by a pooling order shall be deemed for all purposes to be the conduct of the operationsupon each separately owned tract in the drilling unit by the several owners.
(b) The portion of the production allocated or applicable to a separately owned tractincluded in a drilling unit covered by a pooling order shall, when produced, be deemed for allpurposes to have been produced from that tract by a well drilled on it.
(4) (a) (i) Each pooling order shall provide for the payment of just and reasonable costsincurred in the drilling and operating of the drilling unit including, but not limited to:
(A) the costs of drilling, completing, equipping, producing, gathering, transporting,processing, marketing, and storage facilities;
(B) reasonable charges for the administration and supervision of operations; and
(C) other costs customarily incurred in the industry.
(ii) An owner is not liable under a pooling order for costs or losses resulting from thegross negligence or willful misconduct of the operator.
(b) Each pooling order shall provide for reimbursement to the consenting owners for anynonconsenting owner's share of the costs out of production from the drilling unit attributable tohis tract.
(c) Each pooling order shall provide that each consenting owner shall own and beentitled to receive, subject to royalty or similar obligations:
(i) the share of the production of the well applicable to his interest in the drilling unit;and
(ii) unless he has agreed otherwise, his proportionate part of the nonconsenting owner'sshare of the production until costs are recovered as provided in Subsection (4)(d).
(d) (i) Each pooling order shall provide that each nonconsenting owner shall be entitledto receive, subject to royalty or similar obligations, the share of the production of the wellapplicable to his interest in the drilling unit after the consenting owners have recovered from thenonconsenting owner's share of production the following amounts less any cash contributionsmade by the nonconsenting owner:
(A) 100% of the nonconsenting owner's share of the cost of surface equipment beyondthe wellhead connections, including stock tanks, separators, treaters, pumping equipment, andpiping;
(B) 100% of the nonconsenting owner's share of the estimated cost to plug and abandonthe well as determined by the board;

(C) 100% of the nonconsenting owner's share of the cost of operation of the wellcommencing with first production and continuing until the consenting owners have recovered allcosts; and
(D) an amount to be determined by the board but not less than 150% nor greater than300% of the nonconsenting owner's share of the costs of staking the location, wellsitepreparation, rights-of-way, rigging up, drilling, reworking, recompleting, deepening or pluggingback, testing, and completing, and the cost of equipment in the well to and including thewellhead connections.
(ii) The nonconsenting owner's share of the costs specified in Subsection (4)(d)(i) is thatinterest which would have been chargeable to the nonconsenting owner had he initially agreed topay his share of the costs of the well from commencement of the operation.
(iii) A reasonable interest charge may be included if the board finds it appropriate.
(e) If there is any dispute about costs, the board shall determine the proper costs.
(5) If a nonconsenting owner's tract in the drilling unit is subject to a lease or othercontract for the development of oil and gas, the pooling order shall provide that the consentingowners shall pay any royalty interest or other interest in the tract not subject to the deduction ofthe costs of production from the production attributable to that tract.
(6) (a) If a nonconsenting owner's tract in the drilling unit is not subject to a lease orother contract for the development of oil and gas, the pooling order shall provide that thenonconsenting owner shall receive as a royalty the average landowner's royalty attributable toeach tract within the drilling unit.
(b) The royalty shall be:
(i) determined prior to the commencement of drilling; and
(ii) paid from production attributable to each tract until the consenting owners haverecovered the costs specified in Subsection (4)(d).
(7) The operator of a well under a pooling order in which there are nonconsenting ownersshall furnish the nonconsenting owners with monthly statements specifying:
(a) costs incurred;
(b) the quantity of oil or gas produced; and
(c) the amount of oil and gas proceeds realized from the sale of the production during thepreceding month.
(8) Each pooling order shall provide that when the consenting owners recover from anonconsenting owner's relinquished interest the amounts provided for in Subsection (4)(d):
(a) the relinquished interest of the nonconsenting owner shall automatically revert tohim;
(b) the nonconsenting owner shall from that time:
(i) own the same interest in the well and the production from it; and
(ii) be liable for the further costs of the operation as if he had participated in the initialdrilling and operation; and
(c) costs are payable out of production unless otherwise agreed between thenonconsenting owner and the operator.
(9) Each pooling order shall provide that in any circumstance where the nonconsentingowner has relinquished his share of production to consenting owners or at any time fails to takehis share of production in-kind when he is entitled to do so, the nonconsenting owner is entitledto:

(a) an accounting of the oil and gas proceeds applicable to his relinquished share ofproduction; and
(b) payment of the oil and gas proceeds applicable to that share of production not takenin-kind, net of costs.

Amended by Chapter 324, 2010 General Session


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State Codes and Statutes

Statutes > Utah > Title-40 > Chapter-06 > 40-6-6-5

40-6-6.5. Pooling of interests for the development and operation of a drilling unit --Board may order pooling of interests -- Payment of costs and royalty interests -- Monthlyaccounting.
(1) Two or more owners within a drilling unit may bring together their interests for thedevelopment and operation of the drilling unit.
(2) (a) In the absence of a written agreement for pooling, the board may enter an orderpooling all interests in the drilling unit for the development and operation of the drilling unit.
(b) The order shall be made upon terms and conditions that are just and reasonable.
(c) The board may adopt terms appearing in an operating agreement:
(i) for the drilling unit that is in effect between the consenting owners;
(ii) submitted by any party to the proceeding; or
(iii) submitted by its own motion.
(3) (a) Operations incident to the drilling of a well upon any portion of a drilling unitcovered by a pooling order shall be deemed for all purposes to be the conduct of the operationsupon each separately owned tract in the drilling unit by the several owners.
(b) The portion of the production allocated or applicable to a separately owned tractincluded in a drilling unit covered by a pooling order shall, when produced, be deemed for allpurposes to have been produced from that tract by a well drilled on it.
(4) (a) (i) Each pooling order shall provide for the payment of just and reasonable costsincurred in the drilling and operating of the drilling unit including, but not limited to:
(A) the costs of drilling, completing, equipping, producing, gathering, transporting,processing, marketing, and storage facilities;
(B) reasonable charges for the administration and supervision of operations; and
(C) other costs customarily incurred in the industry.
(ii) An owner is not liable under a pooling order for costs or losses resulting from thegross negligence or willful misconduct of the operator.
(b) Each pooling order shall provide for reimbursement to the consenting owners for anynonconsenting owner's share of the costs out of production from the drilling unit attributable tohis tract.
(c) Each pooling order shall provide that each consenting owner shall own and beentitled to receive, subject to royalty or similar obligations:
(i) the share of the production of the well applicable to his interest in the drilling unit;and
(ii) unless he has agreed otherwise, his proportionate part of the nonconsenting owner'sshare of the production until costs are recovered as provided in Subsection (4)(d).
(d) (i) Each pooling order shall provide that each nonconsenting owner shall be entitledto receive, subject to royalty or similar obligations, the share of the production of the wellapplicable to his interest in the drilling unit after the consenting owners have recovered from thenonconsenting owner's share of production the following amounts less any cash contributionsmade by the nonconsenting owner:
(A) 100% of the nonconsenting owner's share of the cost of surface equipment beyondthe wellhead connections, including stock tanks, separators, treaters, pumping equipment, andpiping;
(B) 100% of the nonconsenting owner's share of the estimated cost to plug and abandonthe well as determined by the board;

(C) 100% of the nonconsenting owner's share of the cost of operation of the wellcommencing with first production and continuing until the consenting owners have recovered allcosts; and
(D) an amount to be determined by the board but not less than 150% nor greater than300% of the nonconsenting owner's share of the costs of staking the location, wellsitepreparation, rights-of-way, rigging up, drilling, reworking, recompleting, deepening or pluggingback, testing, and completing, and the cost of equipment in the well to and including thewellhead connections.
(ii) The nonconsenting owner's share of the costs specified in Subsection (4)(d)(i) is thatinterest which would have been chargeable to the nonconsenting owner had he initially agreed topay his share of the costs of the well from commencement of the operation.
(iii) A reasonable interest charge may be included if the board finds it appropriate.
(e) If there is any dispute about costs, the board shall determine the proper costs.
(5) If a nonconsenting owner's tract in the drilling unit is subject to a lease or othercontract for the development of oil and gas, the pooling order shall provide that the consentingowners shall pay any royalty interest or other interest in the tract not subject to the deduction ofthe costs of production from the production attributable to that tract.
(6) (a) If a nonconsenting owner's tract in the drilling unit is not subject to a lease orother contract for the development of oil and gas, the pooling order shall provide that thenonconsenting owner shall receive as a royalty the average landowner's royalty attributable toeach tract within the drilling unit.
(b) The royalty shall be:
(i) determined prior to the commencement of drilling; and
(ii) paid from production attributable to each tract until the consenting owners haverecovered the costs specified in Subsection (4)(d).
(7) The operator of a well under a pooling order in which there are nonconsenting ownersshall furnish the nonconsenting owners with monthly statements specifying:
(a) costs incurred;
(b) the quantity of oil or gas produced; and
(c) the amount of oil and gas proceeds realized from the sale of the production during thepreceding month.
(8) Each pooling order shall provide that when the consenting owners recover from anonconsenting owner's relinquished interest the amounts provided for in Subsection (4)(d):
(a) the relinquished interest of the nonconsenting owner shall automatically revert tohim;
(b) the nonconsenting owner shall from that time:
(i) own the same interest in the well and the production from it; and
(ii) be liable for the further costs of the operation as if he had participated in the initialdrilling and operation; and
(c) costs are payable out of production unless otherwise agreed between thenonconsenting owner and the operator.
(9) Each pooling order shall provide that in any circumstance where the nonconsentingowner has relinquished his share of production to consenting owners or at any time fails to takehis share of production in-kind when he is entitled to do so, the nonconsenting owner is entitledto:

(a) an accounting of the oil and gas proceeds applicable to his relinquished share ofproduction; and
(b) payment of the oil and gas proceeds applicable to that share of production not takenin-kind, net of costs.

Amended by Chapter 324, 2010 General Session


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