PLAN OF UNITIZATION – Oklahoma

 

 

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PLAN OF UNITIZATION

ALMA PICKENS UNI T

S TEPHENS COUNTY , OKLAH OMA

,E ~ y 1,5 / 7″ -1vo. /

5- 1 -69

TABLE OF CONTENT S

ARTICLE

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DEF I NITI ON S
EXHIBITS
CREATION AND EFFECT OF UNIT
PLAN OF OP ERAT ION
ALLOCATION O F UNITIZE D SUBSTANCE S
USE OR LO SS OF UNITIZE D SU B ST ANCES
TITLE S
EASEMENTS OR USE OF SURFACE
IND IVIDUAL RELAT f ORSHIPS AND RIGHTS
GENERAL POW ERS OF UNI T
CREATION OF OPERATING COMMITTEE AND SU PERVISION

OF UNIT OPERATION S

UNIT OPERATOR
AUTHORITIES AND DUTIES OF UNIT OPERATOR
TAXE S
I NSURANCE
A D JUS TMENT OF INVESTMENT S
UNIT EXPENS E
PRODUC TION AS O F THE EFFECTIVE DATE
NON – UNITIZED FORMATI ONS
ABANDONMENT OF W ELL S
CLA IMS AND SUIT S
F ORCE MA JEUR E
I N TERNAL REVENUE PR O VI S I ON
NOTICE S
ORGANIZATION AND EFFECTIVE DATE
TERM AND ABANDONMENT OF OPERATION S
AMENDMENT TO PLAN OF UNITIZATION AND ENLARGEMENT

OF UNIT

RESTRICTED IND IAN LAND S
SIGNING , RATIFICATION , OR APPROVA L

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PLAN OF UNIT I ZATI ON

ALMA P IC KENS UNI T

STE PHENS COUNTY, OKLAHOMA

W ITNESSETH

ARTICLE 1

DEFINITION S

The f o l l owing shal l constitute the Pl an of Unitiz a ti on app l i ca b l e

to the Al ma Pi cke n s Unit, Stephens C o unty, Oklah o ma, c r eated pur suant to
authority of Sections 287 .1 – 287 .15, inclusive, Title 52, Oklahoma
Statutes, 1961 ; and havi ng for its purpose the unitized ma nagement, ope ra-
tion , and fu r the r d evel o pment of the Unitize d Form a t i o n as he r ein defined,
a ll t o the e n d that a g r eater u l timate recove r y of Oi l and G a s may be had
therefrom, waste prevented and the correlative rights of the respective owners
protected .

As used i n this Plan of Unitization, the te r ms herein sha ll have

the fo ll ow ing meaning :

1 .1

Unit means the A l ma P ickens Unit .

1 . 2 Unit Area me a ns the lands desc r ibed by T r acts in Exhibit A

and shown o n E xhibit B .

1 .3 Unitized Formation means that common source of supply of Oil

and Gas underlying the Unit Area, and commonly known or described as follows :

That portion of Deese sands common source of supply
encountered in the electric log interval from 3353
feet to 4690 feet in the Mobil Oil Corporation
C . S . Goodwin well No . 18 located in the SE/4 SW/4 N$/4
Section 10, Township 1 South, Range 4 West, Stephens
County, Oklahoma

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1 . 4 Unitized Substances (unit production) means al l Oil and

Gas within or produced from the Unitized Formation .

1 .5 O il a nd G as means not only oil and gas as such in combination

one with the other but means oi l, gas, casinghead gas, casinghead gasoline ,
condensate, or other hydrocarbons or associated minerals, or any combination
thereof .

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1 . 6 Lessee means an owner of an interest in Unitized Substance s

by virtue of a lease, operating agreement, fee title, or otherwise, inc l uding
a carried interest, which interest is chargeable with and ob l igated to pay
or bear, either in cash or out of production or otherwise, all or a portion
of the cost of drilling, developing, producing, and operating the Unitized
The owner of Oil and Gas Rights that are free of lease or other
Formation .
instrument conveying the working interest to another shall be regarded as a
Lessee to the extent of 7/8 of its interest inUnitized Substances, and as a
Royalty Owner with respect to its remaining 1/8 interest therein .

1 .7

Royalty Owner means an owner of an interest in any portion of

the Unitized Substances or proceeds thereof other than that of a Lessee .

1 . 8 Tract means each parcel of land described as such and given a

Tract number in Exhibit A ,

1 . 9 Unit Operator means the Lessee designated to develop and
operate the Unitized Formation, acting as Operator and not as a Lessee .

1 .10 Operating Co mm ittee means the committee as constituted unde r

Article 11 of this Plan of Unitization .

1 . 11 Tract Particivation means the percentage shown on Exhibit A

for allocating Unitized Substances to a Tract under this Plan of Unitization .

1 . 12 Unit Participation of each Lessee means the sum of the per-

centages obtained by multiplying the working interest of such Lessee in each
Tract by the Tract Participation of such Tract .

1 .13 Outside Substances means,ali substances obtained from any source

other than the i3nitized Formation and which a r e injected into the Unitized
Formation .

1 .1 4 Oil and Gas Ri ghts means the r ight to explore, develop, and

operate lands within the Unit Area for the production of Unitized Substances,
or to share in the production so obtained or the proceeds thereof .

1 .15 Unit Operations means all operations conducted by the Unit or

Unit Operator pursuant to this Plan of Unitization for or on account of the
development and operation of the Unitized Formation for the production of
Unitized Substances .

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1 .1 6 Unit Eau i nment me a ns all pe r s ona l p rop er ty,

l e a se and we l l equip-

ment, plants, and other facilities and equipment taken over or otherwise ac-
quired f or the joint account for use in Unit Ope r ations .

1 .17 Unit Exnense means all cost, expense, or indebtedness incurred

by the Unit or Unit Operator pursuant to this Plan of Unitization .

1 . 18 Effective Date means the time when the Unit takes ove r and

commences Unit Operations .

1 . 19 Co mm ission means the Corporation Commission of the S tate o f

Oklahoma .

1 . 20 Person means a n y i ndividual, co r poration, partnership, common

l aw or statutory trust, ass o ciation of any kind, the State of Ok l ahoma, or
any subdivision or agency thereof acting in a proprietary capacity, guardian,
executor , administrator, fiduciary of any kind , or any entity capable of hold-
ing an interest in the U n itized Formation .

1 .21 Singular and Pl ura l – Gender . Unless the context othe rwise

clearly indicates, words used in the singular inc l udes the plur a l , the p l ural
include the singu l ar, and the neuter gender includes the masculi n e and the
feminine .

2 .1

Exhibits .

Attached hereto are the following exhibits which

are inco r po r ated he r ei n by reference .

2 .1 .1 Exhibit A, which is a schedule that describes each

Tract in the Unit Area and shows its Tract Participation .

2 .1 . 2 Ex hibit B, which is a map that shows the boundary

l i nes of the Unit Area and the Tracts therein .

2 . 1 .3 Exhibit C, which is the Accounting Procedure applicable
to Unit Ope r ations . If the r e is any conflict between this Pl an of
Unitization and Exhibit C , this Pl an of Unitization sha l l prevail .

2 .1 .4 Exhibit D, which contains insurance provisions applicable

to Unit Operations .

ARTICLE 2

EXHIBITS

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2 . 2 Correctin g Errors .

The shapes and descriptions of the respective

Tracts have been established by using the best info rmation available . If it
subsequent l y appears that any Tract, because of diverse royalty or working
interest ownership on the Effective Date hereof, should be divided into mo r e
than one Tract, or that any error has been made in the preparation of exhibits
or information shown thereon, Unit Operato r , with the approval of the Commission,
may correct the mistake by revising the exhibits to conform to the facts . The
revision shall not inc l ude any re-evaluation of engineering or geological inter-
pretations used in determining Tract Participation . Each such revision of an
exhibit sha l l be effective at 7 :00 a .m , on the first day of the calenda r
month next following the filing of the revised exhibit with the Secretary of
the Commission, or on such other date as may be determined by the Operating
Committee and set forth in the revised exhibit .

ARTICLE 3

CREATION AND EFFECT OF UNI T

3 . 1 Oil and Gas R ights Unitized .

Subject to the provisions of this

Plan of Unitization, all Oil and Gas Rights of Royalty Owners in and to the
lands described in Exhibit A, and all Oil and Gas Rights of Lessees in and to
said lands, are hereby unitized insofar as the respective Oil and Gas Rights
pertain to the Unitized Formation, so that Unit Operations may be conducte d
as if the Unitized Formation had been included in a single lease executed by
a l l Royalty Owners, as lessors, in favor of all Lessees, and as if the l ease
had been subject to all of the provisions of this Plan of Unitization .

3 . 2 Personal Property Excepted .

Subject to the provisions of

Article 16, all lease and well equipment, materials, and other faci l ities
heretofore or hereafter placed by any of the Lessees on the lands covered
hereby shall be deemed to be and shall remain personal property belonging to
and may be removed by the Lessees .

3 .3 Amendment of Leases and Other A g reements . The provisions of

the various leases, agreements, division and transfer orders, or othe r instru-
ments covering the respective Tracts or the production therefrom are amended
to the extent necessary to make them conform to the provisions of this P l an of
Unitization, but otherwise shall remain in effect .

3 . 4 Continuation of Leases and Term Roya l ties . Operations, including

drilling operations, conducted with respect to the Unitized Formation o n any
part of the Unit Area, or production from any part of the Unitized Formation
shall be considered as like operations upon or production from each Tract, and
such operations or production shall constitute a compliance with and continu e
in effect each lease, term royalty, or other agreement as to all lands covered
thereby just as if such operations had been conducted and a wel l had been
drilled on and was producing from each Tract .

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3 .5 Tit l es Unaffected by U n itizatio n .

Nothing herei n sha l l be

construed to result in the t r ansfer of title to the Oil a nd Gas Rights by any
P erson to any other Person or to Unit Operator .
for the cooperative deve l opment and operation of the Tracts and for the sharing
of Unitized Substances as herein provided .

The i n tention is to provide

3 .6 Injection Ri ghts . The Unit Ope r ator shal l have the right to

inject into the Unitized Formation any substances in whatevor amounts the Opera-
ting Committee deems expedient for Unit Operations , including the right to dri l l
and maintain injection wel l s on the Unit Area and to use producing or abandoned
oil or gas wells for such purposes .

3 .7

Development Obligation .

Nothin he r ein shal l re l ieve the Unit or

Unit Operator from the obligation to develop reasonab l y as a whole the lands
and l eases subject hereto .

3 .8

Cooperative Agreements . The Lessees as a prudent means in the

interest of conservation and to increase the recovery of Unitized S ubstances
may execute, or authorize and empower the Unit Operator to execute in their
behalf, agreements with the owners of Working Interests in l ands outside the
Unit Area for cooperative deve l opment, operation, fluid injection or similar
prog r ams with respect to the equivalent of the Unitized Formation outside the
Unit Area and the Unitized Formation . Any such agreement shall make provision
for the dril l ing or conversion , equipping and operation of compensating fluid
injection wel l s in the Unitized Formation and adjoining equivalent of the
The rate of f l uid injection into such
Unitized Formation outside the Unit Area .
wells inside the Unit Area shall be approximately equal to the rate of injection
into such wells outside the Unit Area .
in no way affect or alter the percentages of participation established hereu nder
as to the parties hereto , nor shal l the same provide for the sharing or al l oca-
tion of production as between the Unit Area, as herein defined , and a ny outside
lands .

Any such cooperative ag r eement shal l

ARTICLE 4

PLAN OF OPERATIO N

4 . 1

Operating Methods . To the end that the quantity of Unitized
Substances u l timately recoverable may be increased and waste prevented , the
Unit Operator , under direction of the Operating Committee, shall , with dili-
gence and in acc o rdance with good engineering and production p r actices, engage
in waterf l ood operations in the Unitized Formation .

4 .2 Chan g e of Operating Methods .

Nothin herein shal l prevent the

Ope r a t ing Committee from discontinuing or changing in who l e or in part any
meth o d of operation which, in its opinion, is no l onger in accord with good
engineering or production p r actices . Other methods of operatio n may be conducted
or changes may be made by the Operating Committee f r om time to time if dete rmined
by it to be feasib l e, necessary , or desirable to increase the ultimate recove r y
of Unitized Substances .

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ARTICLE 5

ALLOCATION OF UNITIZED SUBSTANCE S

5 .1 Tract Participation .

The Tract Participation of each Tract is

shown in Exhibit A .

5 .2 Allocation to Tracts .

All Unitized Substances that are produced,

except that used in Unit Operations or unavoidably lost, shall be allocated t o
the several Tracts in accordance with the respective Tract Participations effective
during the period that the Unitized Substances were produced . The amount of
Unitized Substances allocated to each Tract, regardless of whether it is mor e
or less than the actual production of Unitized Substances from the well or wells,
if any, on such Tract, shall be deemed for all purposes to have been produced
from such Tract .

5 . 3

Distribution Within Tracts .

The Unitized Substances allocated

to each Tract shall be distributed among, or accounted for to, the Persons en-
titled to share in the production from such Tract in the same manner, in the
same proportions, and upon the same conditions as they would have participated
and shared in the production from such Tract, or in the proceeds thereof, had
this Plan of Unitization not been adopted, and with the same legal effect . If
any Oil and Gas Rights in a Tract are or become divided and owned in severalty
as to different parts of the Tract, the owners of the divided interests, in
the absence of an agreement providing for a different division, shall share in
the Unitized Substances allocated to the Tract, or in the proceeds thereof, in
proportion to the surface acreage of their respective parts of the Tract . A
one-eighth (1/8) part of the Unit Production allocated to each Tract shall in
all events be regarded as royalty to be distributed to and among, or the proceeds
thereof paid to, the Owners of Royalty Interest, free and clear of all Unit
Expense and free of any lien therefor .

5 . 4 Taking Unitized Substances in Kind . The Unitized Substances

a l located to each Tract shall be delivered in kind to the respective Persons
entitled thereto by virtue of the ownership of Oil and Gas Rights therein or
by purchase from such owners . Such Persons or the purchasers of the Unitized
Substances shal l have the right Co construct, maintain, and operate within the
Unit Area all necessary facilities for that purpose, provided that they ar e
so constructed, maintained, and operated as not to interfere with Unit Operations .
Any extra expenditures incurred by Unit Operator by reason of the delivery in
kind of any portion of the Unitized Substances shall be borne by the receiving
Person . If a Royalty Owner has the right to take in kind a share of Unitized
Substances and fails to do so, the Lessee of such Royalty Owner shall be en-
tit l ed to take in kind such share of the Unitized Substances .

5 .5 Failure to Take in Kind .

If any

or separately dispose of its share of Unitized
have the right, for the time being and subject

Person fails to take in kind
Substances, Unit Operator shall
to revocation at will by th e

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