CHAPTER 25 MODEL EXPLORATORY UNIT FORMS

• Jurisdiction: United States

Federal Onshore Oil & Gas Pooling & Unitization - part 2
(Oct 2014)
CHAPTER 25
MODEL EXPLORATORY UNIT FORMS

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EXPLORATORY UNIT

INTRODUCTORY SECTION

PRELIMINARY RECITALS

1. ENABLING ACT AND REGULATIONS

2. UNIT AREA

3. UNITIZED LAND AND UNITIZED SUBSTANCES

4. UNIT OPERATOR

5. RESIGNATION OR REMOVAL OF UNIT OPERATOR

6. SUCCESSOR UNIT OPERATOR

7. ACCOUNTING PROVISIONS AND UNIT OPERATING AGREEMENT

8. RIGHTS AND OBLIGATIONS OF UNIT OPERATOR

9. DRILLING TO DISCOVERY

10. PLAN OF FURTHER DEVELOPMENT AND OPERATION

11. PARTICIPATION AFTER DISCOVERY

12. ALLOCATION OF PRODUCTION

13. DEVELOPMENT OR OPERATION OF NONPARTICIPATING LAND OR FORMATIONS

14. ROYALTY SETTLEMENT

15. RENTAL SETTLEMENT

16. CONSERVATION

17. DRAINAGE

18. LEASES AND CONTRACTS CONFORMED AND EXTENDED

19. COVENANTS RUN WITH LAND

20. EFFECTIVE DATE AND TERM

21. RATE OF PROSPECTING, DEVELOPMENT, AND PRODUCTION

22. APPEARANCES

23. NOTICES

24. NO WAIVER OF CERTAIN RIGHTS

25. UNAVOIDABLE DELAY

26. NONDISCRIMINATION

27. LOSS OF TITLE

28. NONJOINDER

29. COUNTERPARTS

30. SURRENDER

31. TAXES

32. NO PARTNERSHIP

33. WILDLIFE STIPULATION

34. FOREST LAND STIPULATIONS

35. RECLAMATION LANDS

36. POWERSITES

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UNIT AGREEMENT FOR THE DEVELOPMENT AND OPERATION OF THE _________________________ UNIT AREA

COUNTY OF _________________________

STATE OF _________________________

CONTRACT NO. _______________

THIS AGREEMENT, entered into as of the ______ day of __________, 19 ___, by and between the parties subscribing, ratifying, or consenting hereto, and herein referred to as the "parties hereto,"

WITNESSETH:

WHEREAS, the parties hereto are the owners of working, royalty, or other oil and gas interests in the unit area subject to this agreement; and

WHEREAS, the Mineral Leasing Act of February 25, 1920, 41 Stat. 437, as amended, 30 U.S.C. Sec. 181 et seq., authorizes Federal lessees and their representatives to unite with each other, or jointly or separately with others, in collectively adopting and operating under a unit plan of development or operations of any oil and gas pool, field, or like area, or any part thereof for the purpose of more properly conserving the natural resources thereof whenever determined and certified by the Secretary of the Interior to be necessary or advisable in the public interest; and

WHEREAS, the parties hereto hold sufficient interests in the __________ Unit Area covering the land hereinafter described to give reasonably effective control of operations therein; and

WHEREAS, it is the purpose of the parties hereto to conserve natural resources, prevent waste, and secure other benefits obtainable through development and operation of the area subject to this agreement under the terms, conditions, and limitations herein set forth;

NOW, THEREFORE, in consideration of the premises and the promises herein contained, the parties hereto commit to this agreement their respective interests in the below-defined unit area, and agree severally among themselves as follows:

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1. ENABLING ACT AND REGULATIONS.

The Mineral Leasing Act of February 25, 1920, as amended, supra, and all valid pertinent regulations including operating and unit plan regulations, heretofore issued thereunder or valid, pertinent, and reasonable regulations hereafter issued thereunder are accepted and made a part of this agreement as to Federal lands, provided such regulations are not inconsistent with the terms of this agreement; and as to non-Federal lands, the oil and gas operating regulations in effect as of the effective date hereof governing drilling and producing operations, not inconsistent with the terms hereof or the laws of the state in which the non-Federal land is located, are hereby accepted and made a part of this agreement.

2. UNIT AREA.

The area specified on the map attached hereto marked Exhibit "A" is hereby designated and recognized as constituting the unit area, containing __________ acres, more or less.

Exhibit "A" shows, in addition to the boundary of the Unit Area, the boundaries and identity of tracts and leases in said area to the extent known to the unit operator. Exhibit "B" attached hereto is a schedule showing to the extent known to the unit operator, the acreage, percentage, and kind of ownership of oil and gas interests in all lands in the unit area. However, nothing herein or in Exhibits "A" or "B" shall be construed as a representation by any party hereto as to the ownership of any interest other than such interest or interests as are shown in the exhibits as owned by such party. Exhibits "A" and "B" shall be revised by the unit operator whenever changes in the unit area or in the ownership interests in the individual tracts render such revision necessary, or when requested by the Authorized Officer, hereinafter referred to as AO, and not less than four copies of the revised exhibits shall be filed with the proper Bureau of Land Management (BLM) office.

The above-described unit area shall when practicable be expanded to include therein any additional lands or shall be contracted to exclude lands whenever such expansion or contraction is deemed to be necessary or advisable to conform with the purposes of this agreement. Such expansion or contraction shall be effected in the following manner:

(a) The unit operator, on its own motion (after preliminary concurrence by the AO), or on demand of the AO, shall prepare a notice of proposed expansion or contraction describing the contemplated changes in the boundaries of the unit area, the reasons therefor, any plans for additional drilling, and the proposed effective date of the expansion or contraction, preferably the first day of the month subsequent to the date of notice.

(b) Said notice shall be delivered to the proper BLM office, and copies thereof mailed to the last known address of each working interest owner, lessee and lessor whose interests are affected, advising that 30 days will be allowed for submission to the unit operator of any objections.

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(c) Upon expiration of the 30-day period provided in the preceding item (b) hereof, the unit operator shall file with the AO evidence of mailing of the notice of expansion or contraction and a copy of any objections thereto which have been filed with the unit operator, together with an application in quadruplicate, for approval of such expansion or contraction and with appropriate joinders.

(d) After due consideration of all pertinent information, the expansion or contraction shall, upon approval by the AO, become effective as of the date prescribed in the notice thereof or such other appropriate date.

(e) All legal subdivisions of lands (i.e., 40 acres by Government survey or its nearest lot or tract equivalent; in instances of irregular surveys, unusually large lots or tracts shall be considered in multiples of 40 acres or the nearest aliquot equivalent thereof), no parts of which are in or entitled to be in a participating area on or before the fifth anniversary of the effective date of the first initial participating area established under this unit agreement, shall be eliminated automatically from this agreement, effective as of said fifth anniversary, and such lands shall no longer be a part of the unit area and shall no longer be subject to this agreement, unless diligent drilling operations are in progress on unitized lands not entitled to participation on said fifth anniversary, in which event all such lands shall remain subject hereto for so long as such drilling operations are continued diligently, with not more than 90-days time elapsing between the completion of one such well and the commencement of the next such well. All legal subdivisions of lands not entitled to be in a participating area within 10 years after the effective date of the first initial participating area approved under this agreement shall be automatically eliminated from this agreement as of said tenth anniversary. The unit operator shall, within 90 days after the effective date of any elimination hereunder, describe the area so eliminated to the satisfaction of the AO and promptly notify all parties in interest. All lands reasonably proved productive of unitized substances in paying quantities by diligent drilling operations after the aforesaid 5-year period shall become participating in the same manner as during said first 5-year period. However, when such diligent drilling operations cease, all nonparticipating lands not then entitled to be in a participating area shall be automatically eliminated effective as of the 91st day thereafter.

Any expansion of the unit area pursuant to this section which embraces lands theretofore eliminated pursuant to this Subsection 2(e) shall not be considered automatic commitment or recommitment of such lands. If conditions warrant extension of the 10-year period specified in this subsection, a single extension of not to exceed 2 years may be accomplished by consent of the owners of 90 percent (90%) of the working interest in the current nonparticipating unitized lands and the owners of 60 percent (60%) of the basic royalty interests (exclusive of the basic royalty interests of the United States) in nonparticipating unitized lands with approval of the AO, provided such extension application is submitted not later than 60 days prior to the expiration of said 10-year period.

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3. UNITIZED LAND AND UNITIZED SUBSTANCES.

All land now or hereafter committed to this agreement or unleased Federal land shall constitute land referred to herein as "Unitized Land" or "land subject to this agreement." All oil and gas in any and all formations of the Unitized Land are unitized under the terms of this agreement and herein are called "Unitized Substances."

4. UNIT OPERATOR.

_______________ is hereby designated as unit operator and by signature hereto as unit operator agrees and consents to accept the duties and obligations...