353.640 Pooling order -- Notice -- Provisions -- Surrender or sharing of interest --
941 words·~4 min read·
/ky/353-640A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Limited participation -- Review under KRS 353.700.
(1)The operator shall provide a list to the department of all persons reasonably known
to own an oil or gas interest in any tract, or portion thereof, proposed to be pooled in
an application to the department for a pooling order. A pooling order shall be made
only after the applicant provides notice to all persons reasonably known to own an
oil or gas interest in any tract, or a portion thereof, proposed to be pooled. In the
event of the filing of an application for a pooling order under KRS 353.630(2)
where unknown owners or nonlocatable owners exist, the operator shall cause to be
published, not more than thirty
(30)days prior to the submission of an application
for pooling, one
(1)notice in the newspaper of the largest circulation in each county
in which any tract, or portion thereof, proposed to be pooled is located. The notice
shall:
(a)State that an application for a pooling order is being filed with the division;
(b)Describe any tract, or portion thereof, proposed to be pooled;
(c)In the case of an unknown owner, identify the name of the last known owner;
(d)In the case of a nonlocatable owner, identify the owner and the owner's last
known address; and
(e)State that any party claiming an interest in any tract, or portion thereof,
proposed to be pooled should contact the operator at the published address
and provide a copy of the notification to the director within twenty
(20)days
of the date of publication.
The applicant shall file proof of notice with the division concurrently with the
application.
(2)A pooling order shall authorize the drilling, deepening, or reopening, and the
operation of a well for the production of oil or gas on the tracts or portions thereof
pooled; shall designate the operator to drill and operate the well; shall prescribe the
time and manner in which all owners of operating interests in the pooled tracts or
portions thereof may elect to participate therein; shall provide that all reasonable
costs and expenses of drilling, deepening, or reopening, and the completing,
operating, plugging, and abandoning the well shall be borne, and all production
from the well shall be shared by all owners of operating interests in proportion to
the net mineral acres in the pooled tracts owned or under lease to each owner; and
shall make provision for the payment of the reasonable actual cost thereof,
including a reasonable charge for supervision, by all those who elect to participate
therein.
(3)A pooling order shall establish a procedure for the owner of an operating interest
who does not decide to become a participating operator to elect to either:
(a)Surrender, by means of sale or lease, the interest to a participating operator on
a reasonable basis and for a reasonable consideration, which if not agreed
upon shall be determined by the director; or
(b)Share in the operation of the well as a nonparticipating operator on a carried
basis after the proceeds allocable to his or her share equal two hundred percent
(200%) of the share of the costs allocable to his or her interest.
(4)An oil or gas owner whose identity and location remain unknown after thirty
days has passed from the date of publication required by subsection
(1)of this
section and whose interest is pooled pursuant to KRS 353.630(3) shall be deemed to
have elected to lease the interest to the oil or gas operator, exclusive of one-eighth
(1/8) of the production attributable to the unleased interest, and shall not be entitled
to make the election established in subsection
(3)of this section.
(5)Except as provided in this subsection, an oil or gas owner who does not make an
election under the pooling order within thirty
(30)days of the entry of the order
shall be deemed to have leased the oil or gas interest to the oil or gas well operator
in the manner established in subsection
(4)of this section. If the holder of an
operating interest has obtained the interest by lease or other agreement granting the
right to conduct operations to anyone other than the holder of the oil and gas estate,
and if the owner of the operating interest does not make an election under the
pooling order, the holder of the operating interest shall be deemed to have elected to
share in the operation of the well as a nonparticipating operator on a carried basis
after the proceeds allocable to his or her share equal two hundred percent (200%) of
the share of the costs allocable to his or her interest.
(6)A person whose interest is subject to an oil or gas lease or other agreement which
grants to another the right to operate or conduct operations shall not own an
operating interest for the purposes of subsection
(3)of this section.
(7)The department shall provide a copy of the pooling order entered under KRS
353.500 to 353.720 to those required to be noticed. A certified copy of any pooling
order shall be recorded by the operator in the office of the county clerk of the county
or counties in which all or any portion of the pooled tract is located, and the record
of the order, from the time of lodging the order for record, shall be deemed to be
delivery of the order to all unknown or nonlocatable owners.
(8)Any order or final determination of the department under this section shall be
subject to review in accordance with KRS 353.700 and any administrative
regulations promulgated thereunder.