2 Colo. Code Regs. § 404-1-506

Current through Register Vol. 47, No. 23, December 10, 2024

Section 2 CCR 404-1-506 - INVOLUNTARY POOLING APPLICATIONS

a. An application for involuntary pooling pursuant to § 34-60-116, C.R.S., may be filed at any time by an Owner who owns, or has secured the consent of the Owners of, more than 45% of the mineral interests to be pooled within a Drilling and Spacing Unit established by Commission order, prior to or after drilling of a Well, but no later than 90 days in advance of the date the matter is to be heard by the Commission, pursuant to Rule 510. Mineral interests that are owned by a person who cannot be located by the Applicant through reasonable diligence are not included for purposes of determining whether the 45% mineral interest threshold is met.

b. The Commission will receive evidence that Owners were tendered a good faith, reasonable offer to lease or participate no less than 90 days prior to an involuntary pooling hearing. An application for involuntary pooling may be filed concurrently with the sending of a good faith, reasonable offer to lease or participate. While an application for involuntary pooling may be filed at any time prior to or after the drilling of a Well, any involuntary pooling order issued will be retroactive to the date the application is filed with the Commission unless the payor agrees otherwise.

(1) For purposes of this Rule 506, "good faith" means a state of mind consisting in observance of reasonable commercial standards of fair dealing in Oil and Gas Operations, and absence of intent to defraud or seek unconscionable advantage.

c. Upon a showing by the Applicant that it has complied with the Commission's Rules, the Commission may deem an Owner to be a nonconsenting Owner in the area to be pooled if:

(1) After receiving an offer to participate and given at least 60 days to review the offer, the Owner does not elect in writing to consent to participate in the cost of the Well concerning which the pooling order is sought. The offer to participate will include the following information, at a minimum:

A. The location and objective depth of the Well.

i. Directional Wells will include the estimated Measured Depth and True Vertical Depth ("MD", "TVD"); and

ii. Horizontal Wells will include the estimated Measured Depth, True Vertical Depth, and Lateral Length ("MD", "TVD", and "LL");

B. The estimated drilling and completion cost in dollars of the Well (both the total cost and the Owner's share);

C. The estimated spud date for the Well or range of time within which spudding is to occur; and

D. Contact information for an Operator representative who will be available to answer Owner questions.

(2) An authority for expenditure prepared by the Operator and containing the information required above, together with additional information deemed appropriate by the Operator may satisfy these obligations.

(3) If, after receiving a good faith offer to lease and given at least 60 days to review the offer, the unleased Owner has failed to accept or refused a reasonable offer to lease. In determining whether a good faith, reasonable offer to lease has been tendered pursuant to § 34-60-116(7)(d), C.R.S., the Commission will consider the lease terms listed below for the Drilling and Spacing Unit in the application and for all Cornering and Contiguous Units, and additional leases where necessary to obtain a representative sample of the lease market:

A. Date of lease and primary term or offer with acreage in lease;

B. Annual rental per acre;

C. Bonus payment or evidence of its non-availability;

D. Mineral interest royalty; and

E. Such other lease terms as may be relevant.

(4) For an offer to lease to be considered reasonable and have been made in good faith, the offer will be written in clear and neutral language and include information on which the offered price can be determined to be fair.

d. A nonconsenting Owner will be subject to cost recovery pursuant to § 34-60-116(7)(b), C.R.S.

e. All offers to lease or participate will include contact information for a representative of the Applicant to answer questions and the Commission's brochure describing its pooling procedures and the Owner's options related to pooling.

2 CCR 404-1-506

37 CR 16, August 25, 2014, effective 9/30/2014

38 CR 01, January 10, 2015, effective 2/14/2015

38 CR 03, February 10, 2015, effective 3/2/2015

38 CR 07, April 10, 2015, effective 4/30/2015

38 CR 16, August 25, 2015, effective 9/14/2015

39 CR 04, February 25, 2016, effective 3/16/2016

41 CR 05, March 10, 2018, effective 4/1/2018

41 CR 06, March 25, 2018, effective 5/1/2018

41 CR 23, December 10, 2018, effective 12/30/2018

42 CR 02, January 25, 2019, effective 2/14/2019

42 CR 17, September 10, 2019, effective 9/30/2019

42 CR 24, December 25, 2019, effective 1/14/2020

43 CR 17, September 10, 2020, effective 9/30/2020

43 CR 13, July 10, 2020, effective 11/2/2020

43 CR 24, December 25, 2020, effective 1/15/2021

45 CR 07, April 10, 2022, effective 4/30/2022

45 CR 09, May 10, 2022, effective 5/30/2022

45 CR 13, July 10, 2022, effective 7/30/2022