order no 78 - oklahoma corporation commission › ap › orders ›...

BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOM A

APPLICANT : CONT INENTAL RESOURCES ,INC .

REL IEF REQUESTED : POOLING

LEGAL DESCRIPTION :SECTION 11 , TOWNSHIP 8 NORTH ,RANGE 18 EAST , HASKELL COUNTY ,OKLAHOMA

)1

)

►

)►

CAUSE CD NO . 940004 1 30

Order No . 3140 [178

ORDER OF THE COMMISSION

F indings and Order

Administrative Law Judae .Hearing Date and Place : This cause came on for hear i ng before Roy C .

A lletag , Administrative Law Judge for theCorporation Commission of Oklahoma, on the 31st day of January, 1995 , inthe assigned Admin istrat ive Law Judge 's courtroom , J im Thorpe Bu ild ing ,Oklahoma C ity , Oklahoma .

2 . Anoearances : Jay C . Jimerson , Attorney , appeared forRedw ine Resources , Inc . ; Gordon D . Ryan ,

Atto rney , appeared for Cont inental Resources , Inc . ; and Ben Jackson , DeputyGene ra l Counsel for Conservation , filed notice of appearance for theComm ission .

3 . Notice and Jurisdiction : The Commission has jurisdiction of the subjectmatter herein and of the persons intereste d

therein and has jurisdiction to enter this order as hereinafter set forth . Noticeof the filing of the application herein and of the time, date and place of th ehearing thereon was duly and properly given in all respects as required by la wand the rules of the Commission . The Administrative Law Judge hasexamined the notices by publication, the publishers' affidavits of publicatio nthereof, and the affidavit of mailing and the Administrative Law Judg econducted a judicial and adjudicative inquiry into the sufficiency of the searc hto determine the names and whereabouts of the respondents who were serve dby publication and based upon the evidence adduced, the Commission find sthat due diligence has been exercies and a meaningful search of reasonabl yavailable sources at hand has been conducted . The Commission herebyapproves the publication service given herein as meeting the statutoryrequirements, rules of the Commission and minimum standards of state an dfederal due process, and finds that notice has been given in all respects asrequired by law and the rules of the Commission .

4 . Amendments : At the hear ing , the follow i ng parties , and onlythe follow i ng part ies , were dismissed from the

app lication herein : Barbara A . Chumley , now Atkinson ; Florence Cofer ; JohnCofer; Denyse Michelle Daniels ; Calvin E . Eakle ; Glendon Eakle ; Rickey Eakle ;Hanna Oil & Gas Company ; Kathryn B . Hink le , a/k /a Mary Kathryne Bowlby,now Hink le ; Kathy B . H inkle ; Home - Stake O il & Gas Company ; Home -StakeRoya lty Corporat ion ; Albert W . Jones ; J immy Manning ; Lynn Manning ; DonnaBohanan Worsham Rozze ll; Th omas Leon Sm ith ; Bruce Tho rnton ; ClydeWasson , which dismissals were and a re hereby approved . Furthermore , theapplicat ion was amended so as to allow Redwine Resources , Inc . to take ove rand prosecute th is cause , wh ich amendment was and hereby is approved .

5 . Rel i ef Requested : 5 . 1 The app lication in this cause requests th eComm ission to enter an order poo ling the

drilling rights , and fixing and determining the equ ities with respect thereto , forthe Upper Booch , Lower Booch and Hartshorne separate common sources o fsupply in the 640 -acre drilling and spac ing un its formed therefor in Section 11 ,Townsh ip 8 North , Range 18 East of the IM , Haske ll County , Oklahoma , anddesignating Applicant or some other party recommended by Appli cant asoperator under the p lan of development to be estab lished in this cause for theseparate common sources of supply in the drilling and spac ing units invo lvedhe re i n ( incl ud i ng the development of coa l seam methane gas with in such

Continental Resources , Inc .Cause CD No . 940004130

units), and inc luding the proposed initial unit well unde r such plan ofdeve lopment of such un its .

5.2 Spacing . By Order No . 158341, theCommission formed 640-acre drilling and

spacing units in said Section 11 for the Upper Booch, Lower Booch andHartshorne separate common sources of supply .

6 . Relief Granted : 6 . 1 The re lief requested , as described above , ishereby granted so that the rights and equities

of the owners involved here in are hereby pooled , adjud i cated and determinedas to the drilling and developing of and the production of oil and gas (includ ingcoa l seam methane gas ) from the Upper Booch , Lower Booch and Hartshorneseparate common sources of supply in the 640-ac re drilling and spa c ing unitsformed for such separate common sources of supply in Section 11 , Township8 North , Range 18 East of the IM , Haskell County , Oklahoma .

6 .2 Options. The fair and reasonablecompensation to be paid to the owners of

dri lli ng rights or working interest named and described in Exhib it "A " attachedhereto and made a pa rt hereof , in lieu of the right to participate in the workinginterest in and the development of the separate common sources of supply i nthe drilling and spac ing units involved herein under the p lan of deve lopmentestablished in this order , is as set forth below in e ither subparagraph (ii) or ( iii )of th is paragraph, and each of the parties own ing dr i lling rights o r wo rkinginterest herein pooled is hereby accorded the fo llow i ng options :

(i) Participation . To participate in theworking interest in and the developmen t

of the separate common sources of supply in the drilling and spacingunits involved In this cause under the plan of development establishedin this order by agreeing to pay such owner's proportionate part of theactual cost of any well covered hereby and by paying as set forthherein, to Operator, such owner's proportionate part of the $99,530 .00estimated cost of the proposed initial unit well covered hereby, or in lieuof such payment, furnishing to Operator security satisfactory toOperator for the payment thereof within twentv (20) days of the dateof this order so as to perfect such election to so participate; suchowner's proportionate part of the cost of, and of the production from,any such well to be in the proportion that the number of net mineralacres in the units covered by the drilling rights or working interestowned by such owner bears to the entire number of mineral acres insuch units; or

( i i) Cash Consideration. In lieu ofpart icipating in the working interest i n

and the deve lopment of the separate common sources of supply in thedrilling and spacing units i nvolved in this cause in the land coveredhereby , to elect to receive a sum of $50 .00 per net mineral acre ownedby such owner or per net minera l acre covered by an oil and gas leasehe l d by such owner, as the case may be , p lus an excess royalty o roverrid i ng royalty (in addition to the normal 1 /8th royalty as defined in52 O .S . §87 . 1 ) in the max imum amount of 1 /1 6th of 8 /8ths of the oil ,casinghead gas , gas and gas condensate produced from any we llcovered by this orde r, free and clear of all costs , expenses and r i sksincurred in or in connection w ith the drilling , complet i ng , testing ,equ ipp ing and operating of any such well covered hereby ; grovided,however , such normal 1 /8th royalty and such excess roya lty oroverr iding royalty of 1 /16th of 8 /8ths shall be subject to and there sha llbe deducted therefrom a ll post-production costs , including , but notlim ited to , the costs of compress i on , dehydration , gathe ri ng ,transportation and market ing ; rovi , f r her, in the event suchowner 's interest is burdened by a roya lty , overr iding roya lty or othe rburden on product ion in excess of the normal 1 /8th royalty as def inedabove (hereinafter referred to as " burdens "), such burdens sha ll becharged against such excess roya lty or overrid ing royalty of 1 / 16th of

2

Cont inental Resources , Inc .Cause CD No . 940004130

8/8ths so that such excess royalty or overriding royalty shall be reducedby the amount of any such burdens and therefore, any owner electingthis option shall deliver under this order a net revenue interest of81 .25 % of 8/8ths of the oil, casinghead gas, gas and gas condensateproduced from any well covered by this order, with such net revenueinterest being determined by deducting from such owner's share ofproduction all existing royalties, excess or overriding royalties (includingthe one provided for immediately above) and other non-operating or non-cost bearing burdens ; and provided, f r her, that such excess royaltyor overriding royalty of 1/16th of 8/8ths, subject to the reductionprovided for immediately above, and such net revenue interest of81 .25% of 8/8ths shall be proportionately reduced and payable only inthe proportion that the number of net mineral acres in the units coveredby the drilling rights or working interest owned by such owner andrelinquished under this subparagraph bears to the entire number ofmineral acres in such units ; or

iiii) Consideration in Lieu of Cash. In lieuof partic ipating in the working interest

in and the deve lopmen t of the separate common sources of supp ly inthe drilling and spacing units involved in this cause in the land cove redhereby , or electing the option set forth in subparagraph ( ii), above , toelect to receive in lieu of any cash sum , an excess royalty or ove rrid ingroyalty (in add ition to the normal 1/8th royalty as def ined in 52 O . S .§87 . 1 ) in the maxi mum amount of 1 /8th of 8 /8ths of the o il,casinghead gas , gas and gas condensate produced from any wellcovered by this order , free and clear of a ll costs , expenses and r isksincurred in or in connect ion with the drilling , completing , test ing ,equipping and operating of any such well covered hereby; r v ide ,however , such normal 1 /8th royalty and such excess royalty oroverriding royalty of 1 /8th of 8 /8ths shall be subj ect to and there sha llbe deducted therefrom a ll post-production costs , i ncluding , but notlim ited to , the costs of compress ion , dehydration , gather ing ,transportation and ma rket ing ; r v' , f r h r , in the event suchowner's interest is burdened by a royalty , overrid i ng royalty o r otherburden on product ion in excess of the norma l 1/8th royalty as definedabove (here i nafter referred to as "burdens"), such burdens sha ll becharged against such excess roya lty or ove rriding royalty of 1 /8th of8/8ths so that such excess royalty or overrid ing royalty shall be reducedby the amount of any such burdens ; and provided, further, that suchexcess royalty or overriding royalty of 1 /8th of 8 /8ths , subject to thereduction provided for immediately above , shall be propo rtionate lyreduced and payable only in the proportion that the number of netminera l acres in the un its covered by the dr illi ng rights or workinginterest owned by such owner and re linqu ished under th i s subparagraphbears to the entire number of mineral acres in such un its ;

r vi , however, if the drilling rights or working interest of any owner hereinpooled is subject to royalties, excess royalties, overriding royalties, productionpayments and other burdens on production totaling more than 3/16ths of8/8ths of the production of oil, casinghead gas, gas and gas condensateattributable to such drilling rights or working interest so that such owner isunable to deliver under this order a net revenue interest of 81 .25% of 8/8thsof such production, then such owner may elect only the option in eithersubparagraph (i) or (iii), above . Any cash bonus which becomes payable underthis order by virtue of any election or constructive election made with regardto the proposed initial unit well involved herein shall be paid or tendered byOperator and in connection with any such election or constructive election asto such initial unit well, Operator shall acquire from the owners herein pooledall forced pooled acreage, being the interests, if any, relinquished hereunderby the owners herein pooled who elected or were deemed to have elected notto participate in the working interest in and the development of the separatecommon sources of supply in the drilling and spacing units involved hereinunder the plan of development established in this order . In the event anyowner elects or is deemed to have elected to do other than participate in theworking interest in and the development of the separate common sources o f

3


supply in the drilling and spacing units involved in this cause , such owner sha llbe deemed to have re l inqu ished under th i s order all of such owner's righ t, t itle,interest or claim i n and to the separate common sources of supply in thedrilling and spacing units involved here in in the land covered hereby (includingthe proposed in it ia l unit well and any subsequent we ll or wells under the planof development of such units established in th is order), except for the normal1 /8th royalty as defined above and any other share in production to wh ichsuch owner may be entitled by v irtue of any e lect ion or construc ti ve electionhe reunder . Subject to the proviso set fo rth immediately above ( in regard toa limitation on the ava ilable options due to burdens on the drilling rights orworking i nterest of any owner herein poo led), any owner whose drill ing r ightsor wo rk ing interest is herein pooled may make an elect ion (covering suchowner' s full interest in the land invo lved here i n as to the separate commonsources of supp ly covered hereby) of any one or more of the app licableoptions set forth in subparagraphs (i), ( ii ) and (iii), above , and if such owner 'selection covers more than one of such applicable options , such owner sha llspecify i n such election the portion of such owner 's interest to be a llocatedto each such separate option so elected .

6 .3 Election Period . With in the period of fifteen0 5 1 days after the date of th is order , each

owner whose drilling rights or working interest is here in pooled shall del ive rto Operator at the address set forth in paragraph 10 , below , a written electionc overing such owner's full interest in the land involved herein as to theseparate common sources of supply in the dr i l li ng and spac ing un its cove redhereby of one or more of the applicable options set fo rth in subparagraphs (i),( ii ) and (iii ) of paragraph 6 .2 , above , subject to the terms , cond itions andlimitat ions set forth in such paragraph . A time ly election sha ll be deemed tohave been made if such owner on or before the last day of such 15 -day per iodhas sent such wr itten election by telegram o r telegraph to Operato r at theaddress set fo rth in paragraph 10 , below , or has had such written e lectiondu ly postmarked and has placed such wri tten election in the United Statesmail, f irst class , postage prepaid , duly addressed to Operator at the add ressset forth in parag raph 10 , be low .

7. Failure to ProperlkElect: In the event any owner whose drilling rights

or working interest is herein pooled shall fai ltimely and properly to elect in writing under paragraph 6 .3, above, orparagraph 13, below, whichever is applicable, as to all or any portion of suc howner's interest in the units involved herein, such owner as to such interestor the portion thereof not covered by a timely and proper written election shal lbe deemed to have elected not to participate or not to continue to participate ,whichever is applicable, in the working interest in and the development of th eseparate common sources of supply in the drilling and spacing units involvedin this cause under the plan of development established in this order and shal lbe deemed to have elected the following :

(a ) The option contained in subpara -graph ( ii ) of said paragraph 6 . 2 ,

if the drilling rights or working interest of such owner is subject toroyalties , excess royalties , overriding royalt ies , production paymen ts orother burdens on production wh ich total not more than 3/ 16ths of8 /8ths of the production of oil , casinghead gas , gas and gas condensateattributab le to such d rilling rights or working interest so that such owne ris able to deliver under this order a net revenue interest of 81 .25% of8l8ths of such production, or

(b ) The option contained in subpara -graph (iii) of sa id paragraph 6 . 2 ,

if the drilling rights or working interest of such owner is subject toroyalties , excess royalties , overriding royalties , production payments o rother burdens on production which total more than 3/16ths of 8/8thsof the production of o il, casinghead gas , gas and gas condensateattributable to such drilling r ights or working i nterest so that such owne r

4


is unable to deliver under this order a net revenue interest of 81 . 25%of 8 /8ths of such production .

8 . Well Costs - In itialUnit Well and Default : 8 . 1 Well Costs - Initial Un it Well . For the purposes

of this order , the sum of $39 , 080 .00 is fixedas the cost of the proposed initial unit well as a dry ho le under the plan o fdevelopment of the units involved herein as established in th is order ; and forthe purposes of th is orde r, the sum of $99,530.00 is fixed as the cost of suchproposed initial unit we ll as a producing we ll unde r the p lan of deve lopmentof the units invo l ved herein as established in this order ; and i n the event thereis a dispute as to the well costs incurred in connection w ith the initial un it we l linvolved herei n o r as to the work performed on such well , the Comm issionreta ins jurisd iction for the purpose of determ ining whether the costs (includingany cha rge for supe rv ision) incurred in connection with such we ll and the wor kperformed on such we ll were both necessary and reasonable ; and furthermore ,the Comm i ssion retains jur isd ict ion for the purpose of determ ining whether thecosts (including any charge for supervis ion ) incurred i n connection with anyother well drilled subsequent to such in it ia l unit we ll under the p lan ofdevelopment estab lished i n this order for the units invo lved here i n and thework perfo rmed on any such subsequent well were both ne cessa ry andreasonable .

8 . 2 Default by Part icipat ing Owner . In the eventan owner whose drilling rights or working

interest is pooled herein elects under paragraph 6 . 3 , above , to participateunder subparagraph (i ) of paragraph 6 . 2 , above , but thereafter fa ils or refusesto pay or secure the payment of such owner 's proportionate part of the costof such proposed initial unit well under the plan of development of the unitsinvolved here in as provided in said subparagraph ( i ) of said paragraph 6 . 2 ,such owner sha ll be deemed to have withdrawn such owner ' s election to soparticipate and such owner ( as to such owner' s interest in the un its invo lvedherein or the portion thereof covered by such in it ia l elect ion to so partici pate )shal l be deemed to have fa iled to have aff i rmat ively e lected any other optionafforded in paragraph 6 . 2 , above , and is thus subject to the provisions ofparagraph 7 , above ; and in the even t of such owner 's fa il ure or refusa l to sopay or secure the payment of such we ll costs , any cash bonus which becomespayable under this order to such owner shall be pa id or tendered with in h i r(30) days after the last date on which such defaulting owner under this ordercould have paid o r made satisfac tory arrangements for the payment of suchwell costs .

9 . Payment of Cash Sumsand Escrow AccountsTherefor: 9.1 Payment of Cash Bonus. Any cash bonus

which becomes payable by Operator under thi sorder by virtue of any election or constructive election made with regard to th eproposed initial unit well involved herein shall be paid or tendered within hi r

days after the date of this order, except as provided in paragraph 8 .2 ,above, or unless the owner entitled to such funds cannot otherwise be pai das provided below.

9 .2 Escrow Account Under 52 O S §551 at seg.If any payment of cash bonus due and owin g

under this order by virtue of any election or constructive election made withregard to the proposed initial unit well involved herein cannot be made becausethe person entitled thereto cannot be located or is unknown, then such cashbonus shall be deposited (credited) into an escrow account within ninety (90)days after the date of this order as provided in 52 O .S . §551 !g M. and OAC165:10-25-1 gY M. Any royalty payments or other payments due under thisorder to any such owner who cannot be located or who is unknown shall alsobe deposited (credited) into an escrow account established by the holder ofsuch funds as provided in 52 O .S. §551 ~t seq and OAC 165 : 10-25-1 gt seg .The responsibility for filing reports with the Commission as required underOklahoma law and the Commission rules, as cited above, as to bonus, royaltyor other payments deposited (credited) into any such escrow account shall be

5


with the holder of such funds . Such funds deposited (credited) in any suchescrow account shall be held for the exclusive use of , and sole benef it of , thepe rson ent itled thereto until such funds can be pa id to such owner or until theholder of such funds relinqu ishes the funds to the Commiss ion as requ ired bylaw . It shall be the responsibility of Operato r to notify all other holders of thisprovision and of the Commission ru les , cited above , regarding uncla i medmonies under pooling o rders .

9 . 3 Other Escrow Account . If an owner whosedrilling rights or working interest is pooled

herein refuses the cash bonus or any other funds due hereunder or if suchowner 's interest in the units involved in th is cause has a defect or cloud i nthe t itle thereto or if such owner cannot be pa id the cash bonus or any otherfunds due he reunder for any reason other than the reasons set forth i nparagraph 9 . 2 , above , the holder of such cash bonus or other funds maydeposit (credit ) such cash bonus or other funds due such party into an internalescrow account established in the accounting records of such holder and suchcash bonus or other funds sha ll be cred ited to such account for the benefit ofsuch owner . Any funds deposited (cred ited ) in any escrow account asdescribed above sha ll be held for the benefit of the owner entitled thereto untilsuch funds can be paid to such owner or such owner accepts such funds o runt il such title defect o r c loud is cured or removed to the satisfa ction of theparty responsib le or l iable for and hold ing such funds .

10 . Operator : Redw i ne Resources , Inc . is hereby designatedas Operator under the p lan of developmen t

established in this order for the separate common sources of supp ly in thedrilling and spacing un its covered hereby , including the proposed initial un itwe ll under such plan of development of such un its , and all communicat i onsto such Operator sha ll be addressed as fol lows :

Redwine Resources , inc .8214 Westchester DriveSuite 740Dallas , Texas 77225

Telephone: (214 ) 691 -5800

Operator has on file with the Commission a plugging agreement a ndappropr iate secur ity for such agreement .

11 . Commencement of Ooerations : If operat ions on the in it ia l un it well under th ep lan of deve l opment established in th is order

have not been commenced as of the date of this order , Operator shal lcommence or cause to be commenced operat ions on such in it ial un it wel lwith in one -hundred eiahtv (180) days from the date of th is order and in anyevent , sha ll continue or cause to be continued operations on such in it ia l un i twell w ith due d iligence ; otherwise , the prov isions hereof shall be inoperativeand this o rder shall terminate , unless the time fo r commencement of suchoperations on such initial unit well is extended by an order of the Commiss ion .Prov ided , however , in the event Operator fails to time ly commence such in it ia lun it well or to continue opera tions on such well with due diligence and th isorder term inates thereby , as described above , the obligati on to pay any cas hbonus wh ich has become due and payable hereunder sha ll not termina te .

12. Operator's Lien: Operator, in addition to any other rightsafforded Operator, shall have a lien on th e

mineral leasehold estate or rights owned by the other owners in the unitsinvolved herein and upon their shares of the production from any well covere dhereby to the extent that costs incurred in the development and operationsupon the drilling and spacing units involved herein are a charge against suc hinterests . Such liens shall be separable as to each separate owner withi neach of the drilling and spacing units involved herein and shall remain lien suntil the owner or owners drilling or operating any well covered hereby hav e

6


been pa i d such amounts due . The owner o r owners drilling , or paying for thedrilling , or for the operation of any well covered hereby for the bene fit of allsha ll be entitled to production from any such well which wou ld be received bythe owner , o r owners , for whose benefit the well was dr ill ed or opera ted , afterpayment of royalty , until the owner or owners dr illing or operating any su chwel l have been paid such amount due . No part of the production or proceedsaccruing to any owner of a separate interest in any of the dri l l ing and spacingun its involved here in sha ll be app lied toward payment of costs chargeable toany other interest in any such un its .

13 . Subseauent Wells : 13 . 1 If subsequent to the in it ia l unit we ll involvedhere i n , another well is proposed in the dril ling

and spac ing units covered hereby under the plan of development establ ishedi n th is order , Operator or any other propos i ng party sha ll send written noticeof such proposed subsequent well to each party who t imely and proper l ye lected under paragraph 6 . 3 , above , to participate under subparagraph (i) ofparagraph 6 . 2 , above , and who perfected such e lection to so partic ipate , inthe working interest in and the deve lopment of the separate common sou rcesof supply in the dr illi ng and spac ing un its invo lved i n this cause under suc hplan of development . Such wri tten notice sha ll conta in a brief desc ri ption ofsuch p roposed subsequen t we ll and shall inc lude the estimated costs of s uchwe ll as a dry hole and as a producing we ll . Each party entitled to the abo ve-described written not ice of such subsequen t well sha ll have f ifteen (15) daysafter receipt of such written notice to make a wri tten election to continue toparticipate in the working interest in and the deve lopment of the separatecommon sources of supp ly in the dr illing and spac i ng units i nvolved in thiscause under the plan of development establ ished i n this order as to suchproposed subsequent well or in lieu thereof , to e lect one of the app licab leopt ions set forth in subparagraphs ( ii ) and ( iii ) of pa ragraph 6 . 2 , above , subje ctto the terms , conditions and lim itat ions set forth in such parag raph . A time l ye lection under th is paragraph shall be deemed to have been made if such part yon or befo re the last day of such 15 -day period has sent such written e lect io nby telegram or te legraph to Operator at the address set forth in paragraph 1 0 ,above , or has had such written election duly post -marked and has p laced suchwritten e lection in the United States ma il, first c lass , postage prepaid , dulyadd ressed to such Operator at the address se t forth in sa id paragraph 10 . Theonly respondents whose interests are pooled here in entitled to propose asubsequent we ll or make any elections as to such proposed subsequen t wel lsha ll be the pa rt ies who t imely and properly elected under paragraph 6 . 3 ,above , to pa rtic ipate as work i ng interest owners under subpa ragraph (i) ofparagraph 6 . 2 , above , and who perfected such elec tions to so partic i pate , i nthe working interest in and the development of the separate common sou rcesof supp ly in the drill ing and spac ing units involved in th is cause unde r the planof deve lopment establ ished in this order . Any party who did not elect unde rparagraph 6 . 3 , above , to participate as a working i nterest owner in the p la nof developmen t established in this order under subparagraph ( i ) of paragraph6 . 2 , above , o r who failed to properly perfec t an e lect ion to so participate a ssuch working interest owner and who e l ected or was deemed to have ele cte dthe option under subparagraph (ii) or ( iii ) of said paragraph 6 . 2 , sha ll have n oright to make any further election as to such subsequent well or any furthe rsubsequent well or wells under such p lan of development .

13 . 2 In the event a party who is entitled to makea written elect ion as to a subsequent wel l as

described in paragraph 13 . 1 , above , shall fail timely and properly to e lect inwrit ing under such paragraph as to all or any po rtion of such owner 's interestin the drilling and spac ing un its involved here in , such owner as to such intere stor the portion thereof not covered by a timely and proper wr itten election shallbe subject to the provis ions of paragraph 7 , above, in that such owner shallbe deemed to have e lected the opt ion in e ither subparagraph (a ) or (b ) of sa i dparagraph 7 , whichever option is applicable given the b urdens on such party'sinterest. I n the event a party who is ent itled to make a written e lection as toa subsequent we ll as described in pa ragrap h 13.1, above, elects or is deemedto have elected not to continue to part ic ipate in the working interest in andthe development of the separate common sources of supply in the drilling andspac ing units invo lved in this cause under the plan of development establishe d

7


in this order , such owner shall be deemed to have relinquished under this ordera l l of such owner 's right , title , interest or c la im in and to the separate commonsources of supply in the drilling and spacing units i nvolved herein as to suchproposed subsequent well and any furthe r subsequent well or wells under suc hplan of deve lopment , except for the normal 1 /8th roya lty as def ined i npa ragraph 6 .2 , above , and any other share in product ion to wh ich such ownermay be entit led by v irtue of any e lection or construct ive e lect ion hereunder .A party 's election or constructive elect ion not to continue to partic ipate in theworking interest in and the development of the separate common sources ofsupply in the drilling and spac ing units involved herein under the p lan ofdevelopment estab lished in th i s order as to a subsequent well (and any fur thersubsequent we ll or wells) shall not d ivest o r otherwise affect in any man nerthe rights and wo rk i ng interest of such pa rty in any pr ior we ll or we lls drilledunder such plan of de velopment in which such party elected , and perfectedsuch election , to participate or to conti nue to participate as a worki ng interestowner . Any party ent it led to make a wr itten e lect ion as to a proposedsubsequent we ll as described here in , who elects as to the proposedsubsequent well to cont inue to participate , and who perfects such e lectionunder this section 13 to continue to so part icipate , in the working i nterest inand the development of the separate common sources of supply in the dril l ingand spa c ing units invo lved i n this cause under the plan of deve lopmen testab lished in this orde r sha ll participate as a working interes t owner in suchproposed subsequent well and shal l retain the right to participate as a work inginterest owner in any further subsequent we ll or wells dr il led unde r such pla nof deve lopment . Each well subsequent to the i nitial un it well involved here insha ll be hand led in a manne r simi lar to the first subsequent well , a ll asdesc r ibed in this section 1 3 .

13 . 3 Any party entitled to make a wri tten e lectionas to a subsequent well who e lects as to the

proposed subsequent well to continue to pa rticipate in the working interest inand the development of the separate common sources of supply in the drillingand spacing units invo lved in this cause under the p lan of deve lopmen testab lished in this order shal l thereby agree to pay such pa rty 's p roportionatepart of the actual cost of such proposed subsequent well and sha ll pay toOperator such owner 's proportionate part of the est imated cost of suchproposed subsequent well , or in lieu of such payment , furn ish ing to Operato rsecur ity satisfactory to Operator for the payment thereof , w ithin twenty (20)days from the date of receip t of the written not ice of such proposedsubsequent well as described in th is section 13 , and upon such timelypayment o r furnish i ng of such satisfactory security , such pa rty ' s e lection tocontinue to participate as to such subsequent we ll sha ll be perfected . In theevent an owner entitled to make a written election as to a subsequent we llelects as to the proposed subsequent well to cont inue to partic ipate i n theworking i nterest in and the development of the separate common sourc es ofsupp ly in the drilling and spacing units invol ved in this cause under the planof development established in th is order , but thereafter fa ils or refuses to payor secu re the payment of such owner 's p roportionate part of the est i matedcost of such proposed subsequent well w ithin the time per iod and in themanner described above , such owner shall be deemed to ha ve w ithdrawn suc howner 's election to continue to so participate and such owner sha l l be deemedto have failed to have aff irmatively e lected any other option afforde d inparagraph 6.2, above, an d sha ll thus be su bject to the provisions of para graph7 , above , (in that such owne r sha ll be deemed to have elected the option ine ither subparagraph (a ) or (b ) of said paragraph 7, whicheve r option isapp licable given the burdens on such pa rty 's interest) as to such proposedsubsequent well and any further subsequent well or wells under such p lan ofdeve lopment ; and in the event of such owne r's failure o r refusa l to so pay o rsecure the payment of such estimated we ll costs as to such proposedsubsequent wel l, any cash bonus wh ich becomes payab le under this o rder tosuch party shall be paid or tendered w ithin thirty (30) days after the last dateon wh ich such defaulting owner u nder this order could have pa id or madesatisfactory arrangements for the payment of such est imated well costs as tosuch proposed subsequent well . In the event there is a dispu te as to the we llcosts incurred in connect ion with or as to the wo rk performed on anysubsequent well under the p l an of development estab lished in th is orde r after

8


the work has been done on such well , the Comm ission retains jurisdiction forthe purpose of determining whether the costs (i ncluding any charge forsupervision ) i ncurred in connection with such subsequen t we ll and the workperformed on such well were both necessary and reasonab le .

13 .4 Except as provided in paragraph 13 . 3 , above ,or un less the owner entitled to such funds

cannot othe rwise be paid as prov ided in pa ragraphs 9 .2 and 9 . 3 , above , a nycash bonus which becomes payab le by Operator under th is order by vi rtue ofany election or constructive election under this section 13 as to a subsequentwe ll shall be paid o r tendered with in thirty (30) days after the date of receip tof the written notice of the proposed subsequent we ll by the party ele cting orbeing deemed to have e lected such cash bonus .

13 . 5 As to any subsequent well proposed under th issection 13 , Operator shall commence or cause

to be commenced operations on such subsequent wel l w ithin one -hund redeiahtv (180) days from the date of the wri tten notice propos i ng suchsubsequent well and Operator shal l continue or cause to be continued suchopera tions on such subsequent well with d ue d iligence . If such ope rations onsuch proposed subsequent well are not commenced w ithin the above -described 180 -day period , then the e lect ions of the parties as to suchproposed subsequent well shall exp ire and such parties shall be in the sameposition they were i n immed iate ly prior to the written not ice of suchsubsequent well be ing sent by Operator ; and in such event , the r ights acquiredfrom the pa rties e lecting as to the proposed subsequent well not to cont inueto part ic i pate in the working inte rest in and the deve lopment of the separatecommon sou rces of supp ly in the dr i lling and spac i ng units involved in thiscause under the p lan of development established in th is order sha ll berelinqu ished by Operator (and any other acqu ir i ng party) and such relinqu ishedrights shall revest i n such pa rties who e lected not to continue to sopa rticipate . Failure to time ly commence any subsequent we ll under th issection 13 shal l not d ivest or otherwise affect in any manne r the rights andinterests of the va rious parties in any well or wells drilled p rior thereto underthe p lan of development established in this order and sha ll not term inate suchp lan of deve lopment .

13 . 6 A "subsequent well" for purposes of th issection 13 shall not include or cove r any

sidetrack ope ration in the init ial un it we ll or any subsequent we ll coveredhereby , and shall not inc lude or cover any we llbo re that is d rilled as areplacement or substitute wellbore for the initial un it well or any subsequen twell covered hereby because of any p roblems ar ising d irect ly in connect ionwith such in itial un it we ll or any such subsequent we ll . No parties sha ll havethe r ight to make any subsequent elections as to any such s idetrack ope rationor such replacemen t or substitute wellbore .

14. Soecial Findings: Continental Resources, Inc . exercised duediligence to locate each of the parties named

as a respondent in this cause . Furthermore, Continental Resources, Inc . hasmade a bona fide effort to reach an agreement with each respondent in thi scause, who could be located, as to how the units involved in this cause wouldbe developed and Continental Resources, Inc . has been unable to reach a nagreement with the owners named and described as respondents in this cause .Continental Resources, Inc. and Redwine Resources, Inc . are each the owne rof the right to drill a well into and produce hydrocarbons from the separat ecommon sources of supply in the drilling and spacing units involved herein byvirtue of the ownership of valid and subsisting oil and gas leases, or undividedinterests therein, covering the land involved herein .

15. Mailing of Order andAffidavit in Connectio nTherewith : Operator, or its attorney, shall file an affidavi t

with the Commission within ten (10) days fro mthe date of this order stating that a true and correct copy of this order wa smailed within three (3) days from the date of this order to each owner whos e

9

Cont inenta l Resources , Inc .Cause CD No . 940004130

i nterest is pooled by th is order and who could be served . The name andaddress of each such owner shal l be set out in the affidavit, if known .

16 . Reasons for Rel iefGranted : In order to avoid the drilling of unnecessar y

wells and to protect the co rrelative rights o fa ll owners with respect to the separate common sources of supply involvedherein, the owners of the right to drill who have not heretofore reached anagreement w ith respect to the drilling and developing of the drilling andspacing un its i nvolved herein shou ld be required to poo l their interests anddevelop such drilling and spacing units as a unit , upon the terms andconditions set out in this o rder , all of which terms and cond itions are foun dhereby , after consideration of the ev idence presented i n this cause , to besupported by substantial evidence and to be just and reasonab le and such aswill afford each owner in each such unit the oppo rtunity to recover or receive ,without unnecessary expense , each such owner 's just and fair share of theproduction from such unit . In pa rticu l ar , the fair market value of d rilli ng rightsin the land involved here in and the options based thereon as recommended b yOperator are supported by substantia l evidence .

The re lief requested herein is necessary to prevent or assist in p reventing thevarious types of waste prohib ited by law and to p rotect or ass ist i n protectingcorre lative rights , and such requested re lief, as set forth above , should be grantedin the manner set forth above , and IT IS SO ORDERED .

ION COMM S ON OF OKLAHOMA

BOB A H Y , Vice Chairman

E issioner

DONE AND PERFORMED this ~ day of , 1995 .

BY ORDER OF THE COMMISSION : Z&k) A1i7-CHAR W. FLAN AN, ecr ary

REPORT OF THE ADM INISTRATIVE LAW JUDG E

The forego ing findings and order are the repo rt and recommendat i onsof the dm inistrative Law Judge .

I L Owi re Ju ge-~ '

Reviewer

o RA .,080 ,05181- 4130 .ORD2371 .090

v, 4Q'11-~

Date

Ll laat~

10


R9SDOndents - Know Addresses:

Amoco Production CompanyAttn : Scott Ba i leyP .O . Box 800Denver, CO 80201

George H . BrennanP . O . Box 817Quinton , OK 7456 1

Margie L. BrennanP .O . Box 817Qu i nton , OK 7456 1

Cheyenne Operating Company516 E. MainStigler, OK 74462

Continental Resources, Inc .P.O . Box 1032Enid, OK 73702

Jim Eakie, a/k/a Jimmy H . EakleP .O . Box 598Quinton, OK 7456 1

Jimmy EakleP.O . Box 598Quinton, OK 7456 1

Phyllis EakleP.O . Box 598Quinton, OK 7456 1

Executive Land Services, Inc .P.O . Box 20903Oklahoma City, OK 73156

Farmers State BankP.O . Box 610Quinton, OK 74561

John T. Holleman, IV4011 Front DriveBenton, AR 7201 5

Dorothy N . Strckbein, now Koetz19500 Halsted StreetNorthridge, CA 91324

Virginia S. Lay4319 S . DetroitTulsa, OK 74105

Margaret Ann MonksRoute 1, Box 1210Quinton, OK 74561

EXHIBIT "A"

Resnondents - Unknown Addresses :

Jeanette Brown(Address Unknown)

W.D. Brown(Address Unknown)

James Burl Eakle(Address Unknown)

Scott EakleP .O . Box 876Wilburton , OK 74578(Last Known Address )

Charles L. Grant2 ConckinNew York City, NY 10956(Last Known Address )

Lou Ann Eakle Knell , as PersonalRepresentative of the Estate ofDennis Eak le , deceased

Route 4 , Box 306McAlester , OK 74501( Last Known Address )

Odis Ray Manning( Address Unknown )

Etta Schm idt(Address Unknown )

Otis Wasson(Address Unknown )

Jimmy Eugene Williams(Address Unknown )

Sammy F . WilliamsP.O . Box 757Laverne, OK 73845(Last Known Address)

Parties NamedFor Curative Puruoses:

C.W. Bowlby, Jr ., deceasedc/o William H. Hinkle320 S . Boston, Suite 1100Tulsa, OK 74103

John T. Holleman , deceasedc/o John T . Holleman , I V4011 Front DriveBenton , AR 72015

Continenta l Resources , Inc .Cause CD No . 940004130

Respondents - Known Addresses:

R i chard Leon MonksRoute 1 , Box 1210Quinton , OK 74561

Pentagon Oil CompanyP .O . Box 39 1Kilgore, TX 75662

Quinton Schoo lsc/o Arthur Schofield ,P .O . Box 670Quinton , OK 7456 1

Roy Reed L . L . C .P . O . Box 687Poteau , OK 74953

Superintenden t

Donna Bohanan Worsham RozzellP .O . Box 456Broken Bow , OK 74728

School District # 1 3 , a /k/aK i nta School District #13

c/o Max DuncanP . O . Box 219Kinta , OK 74552

A lice Smithc/o Tom L . Sm ithRoute 1 , Box 1220Qui nton , OK 74561

Elmer C. Smith, a/k/aElmer $mith

1406-C Hilby AvenueSeaside, CA 93995

Sharon K . SmithRoute 1 , Box 1220Quinton , OK 7456 1

Tom L . SmithRoute 1 , Box 1220Quin ton , OK 7456 1

Charles T . WilliamsP . O . Box 362Aransas Pass , TX 78336

Parties NamedFor Curative Purposes:

Eue l Lee Jones , deceased(Address Unknown )

Lillie B . Jones , a/k /aLillie Jones , deceased

c/o Albert W . Jones110037 Madriga l StreetSan Diego , CA 92129

Gracie Moore , deceased(Address Unknown )

Gertley Smith , a/k /aGerthy Smith

c /o Hallie Collins1675 Scott Blvd .Santa Clara , CA 95059

Jeff D . Smith, a/k /aJeff Smith , deceased

c/o Norma Jean Cabral2399 E . 14th Street , #64San Leandro , CA 94577

Jewel Sorrels, deceased(Address Unknown )

Dov ie Wasson , deceasedc /o Barbara MusgroveRoute 1 , Box 447Sulphur , OK 7308 6

Oran Wasson, deceasedc/o Barbara MusgroveRoute 1, Box 447Sulphur, OK 7308 6

Pauline Wasson , deceased(Address Unknown)

Each of the above-named individuals has been made a respondent , if living , and ifany of such individuals is deceased , then the unknown he irs , executo rs ,adm i nistrators , devisees , trustees and assigns , both immediate and remo te , of anysuch deceased ind iv idua l have been made respondents herein . Each of the above-named entities that is a partnership , corporation o r other association has been madea respondent if such ent ity cont i nues to have legal ex istence , and if any such en tityis dissolved , then the unknown successors , trustees and assigns , both immed iateand remote , of any such d issolved entity have been made respondents here in . Theabove -named party des ignated as a persona l representative has been made arespondent if presently acting in such capac ity as personal representative and if suchparty is not presently acting in such capac ity as persona l representative , then theunknown su ccesso r or successors to such pe rsonal representative have been maderespondents here in .

05/86-41 30 .n re2371 .090

2

order no 78 - oklahoma corporation commission › ap › orders ›...

Documents