News & Alerts
June 9, 2020 WOGCC JUNE 9, 2020 HEARING ANNOUNCEMENTS
At this morning’s Commission hearing, held virtually, Supervisor Mark Watson announced that the new Force Pooling Statute, enacted under HB0014, will be effective on July 1, 2020. As there are significant changes to the Force Pooling Statute, the WOGCC Attorney General will be holding a work session on the new statute in mid-June. Once we have the details of that work session, we will pass it along. As a brief synopsis, the new Pooling Statute provides that:
– Pooling Orders derived from approved Pooling Applications with the WOGCC will expire twelve (12) months after the Application is approved. If the operator who received the approved Pooling Order does not commence operations within the twelve (12) months of the Pooling Application approval, the Pooling Order will expire.
– Risk penalties were amended to provide:
- The existing risk penalty applies to nonconsenting owners who have entered into a lease for oil and gas development;
- For the first well drilled and when the nonconsenting owner is not subject to a lease, the risk penalty is two hundred percent (200%) of the drilling costs and one hundred twenty-five percent (125%) of the costs of newly acquired equipment for the well;
- For every subsequent well when the nonconsenting owner isn’t subject to a lease, the risk penalty is one hundred fifty percent (150%) of the drilling costs and one hundred twenty-five percent (125%) of the costs of newly acquired equipment for the well.
– There are now mandatory royalty payments to non-consenting owners who are not subject to a lease. The royalty payment is paid during the period that the operator is recovering the risk penalty and is the greater of sixteen percent (16%) or the acreage weighted average royalty interest of the leased tracts within the drilling unit.
– After the operator has collected the full amount of the risk penalty, the unleased, non-consenting owner has the option of electing to participate as a working interest owner in the drilling unit or to continue receiving the royalty.
Supervisor Watson further provided that the current WOGCC March 2016 90-day Policy on APD filing timing is being modified from 90 days to 60 days. The modified policy has not yet been released however; we will provide an update once that policy is made available.
Later in the morning, the Commission heard opening arguments regarding APD protests and 8(m) Applications under the new 8(m) Rule (implemented and made effective December 2019) from Anadarko and WOV. The APD challenges started in 2018 and were stayed until the new APD Rule was adopted in December 2019. The initial focus of the hearing was on Anadarko’s Motion to Dismiss which sought dismissal of WOV’s protests to Anadarko’s APDs on the basis that they were untimely filed. WOV countered that some of the protests were untimely filed due to Anadarko’s failure to notice received and that for each of the protested APDs, WOV had followed the new 8(m) process but Anadarko had not.
In discussing Anadarko’s Motion to Dismiss, the Commissioners indicated that timeliness of the Objection filing must be strictly adhered to and late filing will not be accepted, unless there are extenuating circumstances. The Commissioners agreed that the issue of whether Anadarko complied with the 8(m) filing process is moot, if the original objections were not timely filed. Given the Commissioners’ comments on timeliness and lack of notice, the parties requested a recess to discuss a potential agreement. The Commission agreed to a recess at which time the parties were able to reach an agreement for all APDs at issue. The matter was considered resolved and the Commission heard nothing further from the parties after the agreement was read into the record.