522.0838 - Plan of unitization: Required provisions.
522.0838 Plan of unitization: Required provisions. The plan of unitization for each such unit and unit area must be one suited to the needs and requirements of the particular unit dependent upon the facts and conditions found to exist with respect thereto. In addition to such other terms, provisions, conditions and requirements found by the Division to be reasonably necessary or proper to effectuate or accomplish the purpose of this chapter, and subject to further requirements of this section, each such plan of unitization must contain fair, reasonable and equitable provisions for:
1. The efficient unitized management or control of the further development and operation of the unit area for the recovery of oil and gas from the pool affected. Under such a plan the actual operations within the unit area may be carried on in whole or in part by the unit itself, or by one or more of the lessees within the unit area as the unit operator subject to the supervision and direction of the unit, dependent upon what is most beneficial or expedient. The designation of the unit operator must be by vote of the lessees in the unit in a manner provided in the plan of unitization and not by the Division.
2. The division of interest or formula for the apportionment and allocation of the unit production among and to the several separately owned tracts within the unit area such as will reasonably permit persons otherwise entitled to share in or benefit by the production from such separately owned tracts to produce and receive, in lieu thereof, their fair, equitable and reasonable share of the unit production or other benefits thereof. A separately owned tract’s fair, equitable and reasonable share of the unit production must be measured by the value of each such tract for oil and gas purposes and its contributing value to the unit in relation to like values of other tracts in the unit, taking into account acreage, the quantity of oil and gas recoverable therefrom, location on the structure, its probable productivity of oil and gas in the absence of unit operations, the burden of operation to which the tract will or is likely to be subjected, or so many of such factors, or such other pertinent engineering, geological or operating factors, as may be reasonably susceptible of determination.
3. The manner in which the unit and the further development and operation of the unit area will be financed and the basis, terms and conditions on which the cost and expense thereof will be apportioned among and assessed against the tracts and interests made chargeable therewith, including a detailed accounting procedure governing all charges and credits incident to the operations. Upon and subject to such terms and conditions as to time and rate of interest as is fair to all concerned, reasonable provisions must be made in the plan of unitization for carrying or otherwise financing lessees who are unable promptly to meet their financial obligations in connection with the unit.
4. The procedure and basis upon which wells, equipment and other properties of the several lessees within the unit area are to be taken over and used for unit operations, including the method of arriving at the compensation therefor, or of otherwise proportionately equalizing or adjusting the investment of the several lessees in the project as of the effective date of unit operation.
5. The creation of an operating committee to have general overall management and control of the unit and the conduct of its business and affairs and the operations carried on by it, together with the creation or designation of such other subcommittees, boards or officers to function under the authority of the operating committee as may be necessary, proper or convenient in the efficient management of the unit, defining the powers and duties of all those committees, boards and officers, and prescribing their tenure and time and method for their selection.
6. The time when the plan of unitization becomes effective.
7. The time when and the conditions under which and the method by which the unit may be dissolved and its affairs wound up.
(Added to NRS by 1983, 2073; A 1993, 1693)