CHAPTER 1 THE A.A.P.L. FORM 610-2015 MODEL FORM JOINT OPERATING AGREEMENT-COMMENTARY OF THE FORM 610 REVISION TASK FORCE

• Jurisdiction: United States

Joint Operations and the New AAPL Form 610-2015 Model Form Operating Agreement (Dec 2017)
CHAPTER 1
THE A.A.P.L. FORM 610-2015 MODEL FORM JOINT OPERATING AGREEMENT-COMMENTARY OF THE FORM 610 REVISION TASK FORCE¹
Frederick M. MacDonald
Chairman of the AAPL Form 610 Revision Task Force
Managing Member
MacDonald & Miller Mineral Legal Services, PLLC
Midvale, UT

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FREDERICK M. MACDONALD is a founding member of the Salt Lake area law firm of MacDonald & Miller Mineral Legal Services, PLLC. He focuses on oil and gas law, including title examination of federal, fee, State of Utah, and Indian lands; farmout, joint operating agreement, and other contract drafting and interpretation; unit formation and operation, and administrative practice before the Utah Board of Oil, Gas and Mining and U.S. Interior Board of Land Appeals. He received his B.S. in engineering from Purdue University in 1983 and his J.D. from the Valparaiso University School of Law in 1986, and is a member of both the Utah and Tenth Circuit Court of Appeals Bar Associations. He is an active member of both the Utah and American Association of Professional Landmen (AAPL). He currently serves as chairman of the AAPL's Form 610 Operating Agreement Revision Task Force. In addition, Fred is actively involved with the Rocky Mountain Mineral Law Foundation. He served on the faculty of the biennial federal oil and gas leasing short course for nearly 20 years and as a trustee at large for the Foundation. Fred has authored many articles and papers, and lectures frequently on various oil and gas topics throughout the country. He has been listed in the Best Lawyers in America and in Super Lawyers in the area of oil and gas law every year since 2007 and 2008, respectively. Fred was named Best Lawyers in America's 2012 Salt Lake City Oil and Gas Lawyer of the Year.

I. INTRODUCTION

The American Association of Petroleum (now Professional) Landmen ("AAPL") sanctioned the drafting of a uniform joint operating agreement ("JOA") first in 1956, known as the "Form 610." It quickly became adopted as the industry standard. As a consequence of issues arising over the intervening years, and in an attempt to improve its contents, the Form 610 was revised by AAPL in 1977, 1982 and 1989, the latter revisions occurring within the relatively short span of 12 years.² However, despite the intervening numerous court cases interpreting the various provisions of each incarnation of the Form 610, commentary by numerous attorneys and scholars identifying certain shortcomings and providing suggested improvements and, most significantly, advances in technology such as hydraulic fracturing and horizontal drilling, no further revisions to the Form 610 were made. Recognizing the need to address these factors, the Executive Committee of the AAPL ("EXCOM") authorized the formation of a new task force to revise the Form 610 in the summer of 2011. This paper addresses the Task Force's efforts resulting in, and commentary upon, the revised Form 610 ultimately adopted by the AAPL's governing Board of Directors in December, 2015 (the "Form 610-2015 JOA"). It is the hope and the goal of the Task Force that this paper will assist the users of the Form 610-2015 JOA, as well as lawyers and courts in the event litigation should arise, in understanding the reasoning of the Task Force behind the changes and for widespread acceptance and utilization by the industry.

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II. THE TASK FORCE

Under the direction of Jim Dewbre, Vice President of Land of Southwestern Energy Production Company in Houston, Texas, and then first Vice-President of AAPL, the Task Force was established and comprised of the following members: Fred MacDonald, Attorney with MacDonald & Miller Mineral Legal Services, PLLC in Salt Lake City, Utah, who served as Task Force Chair; Bob Duplantis, Attorney with Gordon, Arata, McCollam, Duplantis & Eagan, LLC in Lafayette, Louisiana; Tom Daily, Attorney with Daily & Woods, P.L.L.C. in Fort Smith, Arkansas, and Adjunct Professor of Law with the University of Arkansas in Fayetteville, Arkansas; Jeff Weems, Attorney with Staff Weems, LLP in Houston, Texas; Dorsey Roach, Landman and Owner of UnitPro Land Consultants, LLC in Oklahoma City, Oklahoma; Mike Curry, Attorney and Vice President of Land with Henry Resources, LLC, in Midland, Texas; Worth Carlin, Landman with Vantage Energy, LLC in Denver, Colorado (formerly with Range Resources Corporation in Pittsburgh, Pennsylvania); and Andy Rudderow, Landman formerly with Anadarko Petroleum Corporation in Houston, Texas (now retired). Dave Padgett, Landman formerly with Noble Energy, Inc. in Denver, Colorado (now retired), also served originally on the Task Force but unfortunately had to resign in 2013. Each was selected for his experience with operational issues and national and diverse regional practice. In addition, Mr. Roach served on the Form 610 Revision Task Force which prepared the Form 610-1989 JOA and provided valuable insight into the process, thoughts, efforts and conclusions with respect thereto. All have contributed to the authorship of this paper.

In addition to these Task Force members, the following also participated with the Task Force at various times in an ex officio capacity, as either an EXCOM member or as the Chairperson of the AAPL's Form Committee: Mr. Dewbre; Mona Ables, Vice President of Land of Concho Resources, Inc. in Midland, Texas; Dora Soria, Landman formerly with ConocoPhillips Company in Anchorage, Alaska; Grant Johnson, Landman and President of Lone Star Production Company in Houston, Texas; David Kalish, Landman formerly with Statoil in Austin, Texas; Bill Justice, Landman with TotaLand in Lafayette, Louisiana; Jim Devlin, Vice President of Land with Suemaur Exploration & Production Company in Corpus Christi, Texas; and Carl Campbell, Executive Vice President of Alamo Resources in Houston, Texas. Their participation and input was of invaluable assistance and the Task Force wishes to publicly acknowledge their service.

III. THE PROCESS

The Task Force conducted its first telephonic meeting in November, 2011. The first few meetings generated an initial plan: the polling of numerous sources, from small

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non-operators to majors, of their respective views of the beneficial provisions and shortcomings of the Form 610-1989 JOA, the collection of various modifications commonly made to address the same and horizontal operations, and to survey various papers and case law to identify other issues. Upon completion of those tasks, a list and prioritization of revision issues would be compiled and then drafting could begin.

However, no sooner had the Task Force started implementing this plan when the EXCOM, experiencing overwhelming requests for horizontal development JOA modifications, requested the Task Force to focus on drafting and issuing such modifications - a "band aid" approach until such modifications could ultimately be implemented in the new form. With that direction, the polling was then exclusively focused on horizontal operational issues only. That polling disclosed that modifications first suggested by Lamont Larsen³ were most commonly being used. Mr. Larsen's template was therefore utilized by the Task Force as its starting point.

Throughout the remainder of 2012 and early 2013, the Task Force therefore focused exclusively on drafting horizontal operational revisions. After numerous meetings and teleconferences, drafts and extensive peer review, the Task Force submitted the Form 610-1989 Horizontal Modification Form, which was approved by the AAPL Board of Directors in September, 2013, and made available to the general public through Forms-on-a-Disk in December, 2013. Mr. Weems of the Task Force has presented several papers about the Form 610-1989 Horizontal Modification Form,⁴ and will be presenting another as part of this special institute. The reader is referred to his papers for further details. The Task Force also made conforming horizontal modifications to the Form 610-1982 JOA, but due to some internal miscommunication between AAPL and its vendor, and due to the imminent completion of the new Form 610-2015 JOA, was never made available for public distribution.

Throughout late 2013 and all of 2014, the Task Force then turned back to overall revisions of the Form 610. A list of over 30 prioritized issues was compiled as a result of the polling and surveying. Although all were carefully reviewed and discussed, not all resulted in revisions ultimately adopted. The Form 610-1989 Horizontal Modification was used as the initial template since it already contained horizontal operational provisions drafted by the Task Force and approved by AAPL. The version of the Form 610-2015 JOA attached hereto is redlined against that template.

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Again, after many teleconferences and drafts, and also based on feedback received on the Form 610-1989 Horizontal Modification Form after its release, the Task Force's original version of the Form 610-2015 JOA was submitted for peer review in January, 2015. The peer review group again was comprised of a wide variety of representatives: landmen from both small non-operators and large majors, academia, accountants, lawyers, etc. The Task Force received comments back in April 2015. Each was extensively reviewed by the Task Force and many resulted in changes to the original version. The Task Force would especially like to acknowledge the Council of Petroleum Accountants Societies, Inc. ("COPAS"), Professor John Lowe of the Southern Methodist University Law School, and Bill Rainbolt of ConocoPhillips Corporation for their peer review and comments. The final version was completed and submitted in September, 2015, and approved by the AAPL Board of Directors in December 2015 (thus its stated "2015" moniker).

AAPL, based on vendor review and advancement in its own technical abilities, decided to make the Form 610-2015...