INTEGRATION OF INTERESTS IN SPACING UNITS
§ 79.31. Application requirements.
When an application is filed for a drilling permit on the area covered by the spacing order, it shall be accompanied by the following:
(1) A survey of the entire spacing unit showing the location and acreage content of tracts or portions of tracts, included within the spacing unit. If the operators and royalty owners included in the unit agree on the amount of acreage contained in each tract included in the unit and file a stipulation to that effect, a survey is not necessary. A counterpart or certified copy of a unit operating agreement or unit agreement signed by all of the operators and royalty owners in the unit, and specifying the participation to which each shall be entitled shall meet the requirements of the stipulation herein referred to. If accurate surveys of the spacing unit or tracts included therein are available, they may be used and a new survey is not required.
(2) If there is only one operator in the area covered or to be covered by the spacing unit, the operator shall file an affidavit to that effect. If there is more than one operator owning an interest within the drilling unit, the operators shall file a stipulation setting out the manner in which the cost of the proposed well is to be paid. A counterpart or certified copy of a joint operating agreement containing the provisions shall meet this requirement.
(3) In the event that all of the operators in the spacing unit have not signed the stipulation set out in paragraph (1), the statement shall be filed stating the names and addresses of the operators who have not executed the agreement and the estimated share of the cost of the well attributable to the interest. The operator or operators desiring to drill the well shall include in this statement whether or not they are willing to advance the nonparticipating operator’s share of the cost of the well, and if the well results in production, to recover twice the amount of the costs out of the nonparticipating operator’s share of the production. The participating operators shall include the statement with an application for an integration order as provided in § 79.33 (relating to integration orders). The Department will then notify the nonparticipating operators that they shall come in and file their proportionate share of the estimated cost, or a satisfactory bond securing the payment of the amount at the time it is expended by the participating operators, with the Department within 30 days from the date of the notice. The following provisions shall be alternatives to the requirements of this paragraph:
(i) If the participating operators have indicated their desire to advance the nonparticipating operator’s share of the cost, then the notice shall so state and shall state that the nonparticipating operator shall then be entitled to receive his proportionate share of the production, if any, after a sum equal to double his proportionate share of the cost of the drilling and equipping the well have been repaid to the participating operators, plus an additional charge for supervision, cost of operation, and interest, at the rate of 6% per annum, out of 7/8 of the proportionate part of the production from the well drilled on the unit which is allocated to the tract or interest owned by the nonparticipating operator.
(ii) If the participating operators have indicated that they are not willing to advance the share of the cost attributable to the nonparticipating operator, the notice shall state that this is the fact and that a hearing for the compulsory unitization of interests will be held in accordance with § 79.33.
Source The provisions of this § 79.31 adopted August 12, 1971, effective August 13, 1971, 1 Pa.B. 1726.
Cross References This section cited in 25 Pa. Code § 79.11 (relating to drilling permits); 25 Pa. Code § 79.32 (relating to issuance of drilling permit); and 25 Pa. Code § 79.33 (relating to integration order).
No part of the information on this site may be reproduced for profit or sold for profit.
This material has been drawn directly from the official Pennsylvania Code full text database. Due to the limitations of HTML or differences in display capabilities of different browsers, this version may differ slightly from the official printed version.
