75-58-13 - Gas imbalances; operator statements; cash balancing; oil and other minerals; costs and expenses; deliverability tests.
§ 75-58-13. Gas imbalances; operator statements; cash balancing; oil and other minerals; costs and expenses; deliverability tests.
(a) Gas Imbalances. Notwithstanding anything to the contrary in this section, if any balancing party takes and disposes of less than its entitlement during any calendar month, then the volume not taken by such party may be taken by any other party or parties as allocated by the operator.
(b) Operator Statements. Not less frequently than quarterly, the operator shall furnish the balancing parties a written statement showing (a) the total volume of gas taken by each party during the month or months being reported; (b) the makeup gas taken by each party during the month or months; (c) the cumulative volume of gas taken by each party as of the end of that month or months; and (d) the cumulative overproduction or cumulative underproduction, if any, of each party for the time period being reported, as adjusted by any cash balancing as provided by Section 75-58-13(c). The operator statement shall be current as of the production month which falls two (2) months prior to the time the operator statement is issued. Makeup gas taken by an underproduced party shall be credited to the account of the underproduced party in the order of accrual of underproduction.
(c) Cash Balancing. Any overproduced party has the right, but not the obligation, exercisable not more frequently than once a year, to cash balance its cumulative overproduction with underproduced parties. After permanent cessation of production, each overproduced party shall be required to cash balance with underproduced parties. In order to cash balance, the overproduced party shall first furnish a statement to the underproduced parties and to the operator showing the volume and value of the cumulative overproduction, based upon the net proceeds actually received by the overproduced party for the cumulative overproduction, less (i) two and one-half percent (2-1/2%) of the net proceeds received by the overproduced party for the cumulative overproduction, and (ii) the direct and actual marketing expenses and transportation costs attributable to the cumulative overproduction. Within sixty (60) days after issuance of the statement as described above, the overproduced party shall pay each underproduced party in accordance with the statement and without interest. To the extent any values used to calculate a cash settlement hereunder are subject to a refund by the overproduced party pursuant to law, regulation or governmental order, the underproduced party receiving such cash settlement shall, prior to payment thereof, agree in writing to indemnify the overproduced party against the underproduced party's proportionate part of any refund, including interest which the overproduced party shall be required to make.
(d) Volumetric Balancing. Each underproduced party shall have the right to take makeup gas during a month after first giving the operator and all other non-operators written notice at least fifteen (15) days before the beginning of a calendar month.
The right of all underproduced parties to take makeup gas shall be limited to the lesser of (1) ten percent (10%) of the overproduced party's entitlement of gas or (2) fifty percent (50%) of the underproduced party's interest in the well. If two or more underproduced parties desire to take makeup gas during the same month and the combined volume they desire to take exceeds the volume available as makeup gas, then the underproduced parties shall share the makeup gas in proportion to their cumulative underproduction. In no event shall any overproduced party be allocated less than ninety percent (90%) of that overproduced party's entitlement. Makeup gas taken by an underproduced party shall be credited to the account of the underproduced party in the order of accrual of underproduction.
(e) Oil and Other Minerals. Regardless of the volume of gas actually taken by any balancing party, such party shall share in the production of oil, condensates and other minerals separated in the facilities operated for the production of oil and gas from the well. Operator and non-operators shall share in and own the production of all oil as produced and saved, notwithstanding such party's status as an overproduced party or underproduced party.
(f) Costs and Expenses. Regardless of the volume of gas actually taken by any balancing party, such party shall bear costs and expenses as otherwise provided in agreements between the parties or as provided by law.
(g) Deliverability Tests. At the request of any balancing party, operator shall, subject to operational constraints, produce the entire well stream for a deliverability test not to exceed seventy-two (72) hours in duration if required under such requesting party's gas purchase agreement. The gas produced and delivered during such deliverability test shall be allocated to the balancing parties on the basis of their entitlement, provided, however, that should any purchaser of gas owned by the balancing parties not requesting such deliverability test fail or refuse to accept such gas or any part thereof, then and in such event, the gas not so taken shall be allocated as overproduction to the balancing party requesting the deliverability test.
Sources: Laws, 1991, ch. 490, § 7, eff from and after July 1, 1991.