Current through Register Vol. 47, No. 17, September 10, 2024
a. An
application for involuntary pooling pursuant to §
34-60-116, C.R.S., may be filed at
any time by an Owner who owns, or has secured the consent of the Owners of,
more than 45% of the mineral interests to be pooled within a Drilling and
Spacing Unit established by Commission order, prior to or after drilling of a
Well, but no later than 90 days in advance of the date the matter is to be
heard by the Commission, pursuant to Rule 510. Mineral interests that are owned
by a person who cannot be located by the Applicant through reasonable diligence
are not included for purposes of determining whether the 45% mineral interest
threshold is met.
b. The Commission
will receive evidence that Owners were tendered a good faith, reasonable offer
to lease or participate no less than 90 days prior to an involuntary pooling
hearing. An application for involuntary pooling may be filed concurrently with
the sending of a good faith, reasonable offer to lease or participate. While an
application for involuntary pooling may be filed at any time prior to or after
the drilling of a Well, any involuntary pooling order issued will be
retroactive to the date the application is filed with the Commission unless the
payor agrees otherwise.
(1) For purposes of
this Rule 506, "good faith" means a state of mind consisting in observance of
reasonable commercial standards of fair dealing in Oil and Gas Operations, and
absence of intent to defraud or seek unconscionable advantage.
c. Upon a showing by the Applicant
that it has complied with the Commission's Rules, the Commission may deem an
Owner to be a nonconsenting Owner in the area to be pooled if:
(1) After receiving an offer to participate
and given at least 60 days to review the offer, the Owner does not elect in
writing to consent to participate in the cost of the Well concerning which the
pooling order is sought. The offer to participate will include the following
information, at a minimum:
A. The location
and objective depth of the Well.
i.
Directional Wells will include the estimated Measured Depth and True Vertical
Depth ("MD", "TVD"); and
ii.
Horizontal Wells will include the estimated Measured Depth, True Vertical
Depth, and Lateral Length ("MD", "TVD", and "LL");
B. The estimated drilling and completion cost
in dollars of the Well (both the total cost and the Owner's share);
C. The estimated spud date for the Well or
range of time within which spudding is to occur; and
D. Contact information for an Operator
representative who will be available to answer Owner questions.
(2) An authority for expenditure
prepared by the Operator and containing the information required above,
together with additional information deemed appropriate by the Operator may
satisfy these obligations.
(3) If,
after receiving a good faith offer to lease and given at least 60 days to
review the offer, the unleased Owner has failed to accept or refused a
reasonable offer to lease. In determining whether a good faith, reasonable
offer to lease has been tendered pursuant to §
34-60-116(7)(d),
C.R.S., the Commission will consider the lease terms listed below for the
Drilling and Spacing Unit in the application and for all Cornering and
Contiguous Units, and additional leases where necessary to obtain a
representative sample of the lease market:
A.
Date of lease and primary term or offer with acreage in lease;
B. Annual rental per acre;
C. Bonus payment or evidence of its
non-availability;
D. Mineral
interest royalty; and
E. Such other
lease terms as may be relevant.
(4) For an offer to lease to be considered
reasonable and have been made in good faith, the offer will be written in clear
and neutral language and include information on which the offered price can be
determined to be fair.
d. A nonconsenting Owner will be subject to
cost recovery pursuant to §
34-60-116(7)(b),
C.R.S.
e. All offers to lease or
participate will include contact information for a representative of the
Applicant to answer questions and the Commission's brochure describing its
pooling procedures and the Owner's options related to pooling.
