Utah Administrative Code
Topic - Natural Resources
Title R649 - Oil, Gas and Mining; Oil and Gas
Rule R649-2 - General Rules
Section R649-2-8a - Consenting to Participate in a Well

Universal Citation: UT Admin Code R 649-2-8a

Current through Bulletin 2024-18, September 15, 2024

1. Except as provided in Subsection (2), an owner shall be determined by the board to be a "Nonconsenting owner" as defined in Section 40-6-2 if, within 30 days from the date the notice of opportunity to participate is received, the owner has failed to:

1.1. Execute and deliver to the operator an executed AFE for the well; and

1.2. Execute and deliver to the operator a JOA to govern the drilling and operation of the well and applicable drilling unit with the operator, and subject the owner to the risk compensation award under Section 40-6-6.5 as may be determined by the board.

2. If, within 30 days from the date the notice of opportunity to participate is received or such later date as provided for by the notice of opportunity to participate, or by separate written agreement, an owner has delivered to the operator an executed AFE, and subject to Subsection R649-2-8a(5), written objections, addressing the specific provisions of the operator's proposed JOA to which the owner in good faith objects, the reasoning for each objection, and modifications or alternative provisions the owner proposes in lieu thereof, the owner shall be deemed a "Consenting owner" as defined in Subsection 40-6-2(4).

3. Failure of an owner to comply with the requirements of Subsection (2) shall results in the determination by the board that the owner is a Nonconsenting owner and subject the owner to the risk compensation award under Section 40-6-6.5 as may be determined by the board.

4. An owner who complies with the requirements of Subsection (2) or an operator who in good faith rejects said owner's proposed modifications or alternate provisions to the JOA may request that the board determine the terms of the JOA in accordance with the provisions of Subsection 40-6-6.5(2) as follows:

4.1. if the operator has filed a request for agency action for compulsory pooling of owners in the well and associated drilling unit has been filed, either the owner or the operator may move the board to determine the reasonableness of the costs charged and the terms of the JOA between the owner and operator as part of the proceeding; and

4.2. if no request for agency action has been filed for the compulsory pooling of owners in the well and associated drilling unit, then either the owner or the operator may file a request for agency action within 60 days of the receipt by the operator of the owner's written objections;

4.3. if neither Subsection (4.1) or (4.2) timely occurs, then the actual costs incurred shall be deemed by the board as just and reasonable, and the terms of the JOA as proposed by the operator in the notice of opportunity to participate shall be deemed by the board to govern as between the operator and the owner in any subsequent hearing before the board;

4.4. if a hearing is held before the board regarding disputed provisions or terms of a JOA, the scope of the hearing shall be limited to addressing only the terms at issue within the proposed JOA. Any JOA approved and adopted by the board shall include any undisputed terms and conditions of the JOA proposed by the operator and govern as between the operator and the owner. If the board determines the owner's objections to the costs charged are justified, the operator shall apply the amounts over and above those found to be reasonable charges as credit against the owner's proportionate share of future operational expenses.

5. Articles VII.A through D of the standard and unmodified A.A.P.L. Form 610-2015 Model Form Operating Agreement, which are incorporated by this reference, are deemed just and reasonable under any circumstances, and shall be adopted by the board in any JOA dispute under Subsection R649-2-8a(4) retroactively effective to the date the AFE is signed by the consenting owner pursuant to Subsection R649-2-8a(2) above; provided that, as to Article VII. D.3, the applicable "risk penalty" referred to therein shall be set by the board. If these provisions are contained in the JOA proposed by the operator without modification, any objection to them shall be summarily rejected by the board.

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