§ 79.33. Integration order.
(a) In the event that the participating operators are not willing to advance the share of the cost of the well attributable to nonparticipating operators, they shall file an application for an integration order. The application shall accompany the application for a drilling permit on the spacing unit as provided in § 79.31 (relating to application requirements).
(b) Notice of the application for an integration order shall be given by certified mail to all other operators and royalty owners within the unit whose interests are of record, at least 15 days prior to the date of the hearing, or in the alternative by personal service. If the persons or their addresses are unknown to the applicant, notice may be given by the Department by publication for 2 successive weeks in a newspaper of general circulation in the county, or each county if there be more than one in which the lands embraced within the unit are situated. The first publication shall be at least 15 days prior to the date of the hearing.
(c) The integration order shall contain the following:
(1) The proportionate amount of the estimated cost of drilling, completing and equipping the well attributable to the interest of each nonparticipating operator. If the estimated cost of the well is disputed the Department will determine the estimated cost and adjust this amount to the actual cost after the well is completed and equipped.
(2) The value in money of the operating interest, or leasehold estate, owned by the nonparticipating operator, or if requested by the nonparticipating operator, and at the discretion of the Department, the amount of overriding royalty or carried interest which may be retained by the nonparticipating operator in return for transfer of the operating or leasehold rights to the participating operators.
(3) A form of oil and gas lease, assignment or other agreement which shall fix the future rights between the participating operator and nonparticipating operators, which lease form, assignment or other agreement shall provide for a 1/8 royalty on both oil and gas, shall cover only the formation or horizon covered by the spacing order, and shall be for a primary term which allows for a reasonable time to commence the well on the spacing unit, and as long thereafter as oil or gas is produced in paying quantities from such spacing unit. If lands owned by the Commonwealth are subject to the integration order, the lease shall contain provisions protecting the surface of the land for the purposes for which it was acquired by the Commonwealth.
(d) After the expiration of the time allotted in the integration order for the nonparticipating operator to contribute his share of the estimated cost, the participating operators may acquire the nonparticipating operators’ operating rights or leasehold interest by paying to the nonparticipating operator the cash value for the leasehold estate as fixed by the integration order, or in the alternative paying the money value to the Department which will be held by the Department for the credit of the operator and may be withdrawn by him at any time or by filing an agreement with the Department agreeing to the overriding royalty or carried interest fixed by the integration order. An oil and gas lease, assignment or other agreement on the form specified by the Department in accordance with subsection (c) shall be executed by the nonparticipating operator as lessor to the participating operators as lessee. If the nonparticipating operator fails or refuses to execute the lease or assignment, the Department will execute the lease or assignment on his behalf, and the lease or assignment shall be binding upon him from and after the date of execution.
(e) The application for an integration order shall be accompanied by a fee of $500.
Source The provisions of this § 79.33 adopted August 12, 1971, effective August 13, 1971, 1 Pa.B. 1726; amended November 7, 1980, effective November 8, 1980, 10 Pa.B. 4294. Immediately preceding text appears at serial page (47889).
Cross References This section cited in 25 Pa. Code § 79.31 (relating to application requirements).
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