§ 30-5-110 — Agreements for waterflooding or other recovery operations, repressuring or pressure-maintenance operations, cycling or recycling operations; operation as a unit of 1 or more pools or parts thereof and pooling of interests in oil and gas therein; amendment of orders and agreements

(a) An agreement for waterflooding or other recovery
operations involving the introduction of extraneous forms of
energy into any pool, repressuring or pressure-maintenance
operations, cycling or recycling operations, including the
extraction and separation of liquid hydrocarbons from natural
gas in connection therewith, or for carrying any other method of
unit or cooperative development or operation of one (1) or more
pools or parts thereof, is authorized and may be performed, and
shall not be held or construed to violate any of the statutes of
this state relating to trusts, monopolies, or contracts and
combinations in restraint of trade, and may be submitted to the
commission for approval as being in the public interest or
reasonably necessary to prevent waste or to protect correlative
rights. Approval of such agreement by the commission shall
constitute a complete defense to any suit charging violation of
any statute of this state relating to trusts, monopolies and
combinations in restraint of trade on account of such agreement
or on account of operations conducted pursuant thereto. The
failure to submit such an agreement to the commission for
approval shall not for that reason imply or constitute evidence
that such agreement or operations conducted pursuant thereto are
in violation of laws relating to trusts, monopolies and
combinations in restraint of trade.
(b) Except when context otherwise requires, the terms used
or defined in W.S. 30-5-101, shall have the same meaning when
used in this section.
(c) Any interested person may file an application with the
commission requesting an order providing for the operation as a
unit of one (1) or more pools or parts thereof and for the
pooling of the interests in the oil and gas in the proposed unit
area for the purpose of conducting such unit operation. Such
application shall contain:
(i) A description of the land and pool, pools or
portions thereof proposed to be so operated, termed the "unit
area";
(ii) The names, as disclosed by the conveyance
records of the county or counties in which the proposed unit
area is situated, and the status records of the district office
of the bureau of land management, of (A) all persons owning or
having an interest in the oil and gas in such unit area or the
production therefrom including mortgages and the owners of other
liens or encumbrances, (B) all owners of every tract of land not
included within but which immediately adjoins the proposed unit
area or a corner thereof, and (C) the addresses of all such
persons and owners, if known. If the name or address of any such
person or owner is unknown, the application shall so indicate;
(iii) A statement of the type of operations
contemplated in order to effectuate the purposes of this
section;
(iv) A proposed plan of unitization applicable to the
proposed unit area which the applicant considers fair,
reasonable and equitable and which shall include provisions for
the formula or method of allocating oil and gas produced from
the proposed unit area to and among the separately owned tracts
within such area, the appointment of a unit operator and the
time when the plan is to become effective;
(v) A proposed operating plan providing the manner in
which the unit will be supervised and managed and costs
allocated and paid, unless all owners within the proposed unit
area have joined in executing an operating agreement or plan
providing for such supervision, management and allocation and
payment of costs.
(d) Upon filing of such application, the commission shall
promptly set the matter for hearing, and in addition to the
notice, if any otherwise required by law or the commission's
rules, shall cause notice of such hearing, specifying the time
and place of hearing, and describing briefly its purpose and the
land affected, to be mailed by certified mail at least fifteen
(15) days prior to the hearing to all persons whose names and
addresses are required to be listed in the application.
(e) If after considering the application and hearing the
evidence offered in connection therewith, the commission shall
enter an order setting forth the following described findings
and approving the proposed plan of unitization and proposed
operating plan, if any, if the commission finds that:
(i) The material allegations of the application are
substantially true;
(ii) Such unit operation is feasible, will prevent
waste, will protect correlative rights, and can reasonably be
expected to increase substantially the ultimate recovery of oil
or gas;
(iii) The value of the estimated additional recovery
of oil or gas will exceed the estimated additional costs
incident to conducting unit operations;
(iv) The oil and gas allocated to each separately
owned tract within the unit area under the proposed plan of
unitization represents, so far as can be practically determined,
each such tract's just and equitable share of the oil or gas in
the unit area;
(v) Where the unit embraces less than the whole of a
pool, that the portion thereof to be included within the unit
area is of such size and shape as may be reasonably required for
the successful and efficient conduct of the unitized method or
methods of operation for which the unit is created and that the
conduct thereof will have no material adverse effect upon the
remainder of such pool;
(vi) In case there are owners who have not executed
an operating agreement or agreed to the proposed operating plan
covering the supervision, management and allocation of payment
costs, that such proposed operating plan:
(A) Makes a fair and equitable adjustment among
the owners within the unit area for their respective investments
in wells, tanks, pumps, machinery, materials and equipment which
have contributed to the unit operations;
(B) Provides for a fair and equitable
determination of the cost of unit operations, including capital
investment, and establishes a fair and equitable method for
allocating such costs to the separately owned tracts and for the
payment of such costs by the persons owning such tracts, either
directly or out of such person's respective share of unit
production;
(C) If necessary, prescribes fair, reasonable
and equitable terms and conditions as to time and rate of
interest for carrying or otherwise financing any person who is
unable to promptly meet his financial obligations in connection
with the unit;
(D) Provides that each owner shall have a vote
in the supervision and conduct of unit operations corresponding
to the percentage of costs of unit operations chargeable against
the interests of such person; and
(E) Provides for fair and equitable terms and
conditions for removal of unit operator and for appointment of a
successor unit operator.
(f) No order of the commission authorizing the
commencement of unit operations shall become effective until the
plan of unitization has been signed or in writing ratified or
approved by those persons who own at least eighty percent (80%)
of the unit production or proceeds thereof that will be credited
to royalty and overriding royalty interests which are free of
costs, and unless both the plan of unitization and the operating
plan, if any, have been signed, or in writing approved or
ratified, by those persons who will be required to pay at least
eighty percent (80%) of the cost of unit operations. However, to
the extent that overriding royalty interests are in excess of a
total of twelve and one-half percent (12 1/2%) of the production
from any tract, such excess interests shall not be considered in
determining the percentage of approval or ratification by such
cost-free interests. If such consent has not been obtained at
the time the commission order is made, the commission shall,
upon application, hold such supplemental hearings and make such
findings as may be required to determine when and if such
consent has been obtained. Notice of such supplemental hearing
shall be given by regular mail at least fifteen (15) days prior
to such hearing to each person owning interests in the oil and
gas in the proposed unit area whose name and address was
required by the provisions of paragraph (c)(ii) of this section
to be listed in the application for such unit operations. If the
required percentages of consent have not been obtained within a
period of six (6) months from and after the date on which the
order of approval is made, such order shall be ineffective and
revoked by the commission, unless, for good cause shown, the
commission extends that time. Any interested person may file an
application with the commission requesting an order applicable
only to the proposed unit area described in the application
which shall provide for the percentage of approval or
ratification by either cost-free or cost-bearing interests, or
both, to be reduced from eighty percent (80%) to seventy-five
percent (75%). The application shall contain the information
required by subsection (c) of this section and any order of the
commission entered pursuant to the application must comply with
subsection (e) of this section. Notice of the hearing on the
application shall be given in the same manner and to the same
persons as required by subsection (d) of this section. If the
commission finds that negotiations were being conducted on the
effective date of this act or have been conducted for a period
of at least nine (9) months prior to the filing of the
application, that the applicant has participated in the
negotiations diligently and in good faith, and that the
percentage of approval or ratification required by this
subsection cannot be obtained, the commission may reduce any
percentage of approval or ratification required by this section
from eighty percent (80%) to seventy-five percent (75%). Such an
order shall affect only the unit area described in the
application and shall operate only to approve the proposed plan
of unitization and proposed operating plan and to reduce the
required percentage of approval or ratification thereof and
shall not change any other requirement contained in this
section.
(g) From and after the effective date of an order of the
commission entered under the provisions of this section, the
operation of any well producing from the unit area defined in
the order by persons other than the unit operator or persons
acting under the unit operator's authority, or except in the
manner and to the extent provided in the plan of unitization
approved by the order, shall be unlawful and is hereby
prohibited.
(h) An order entered by the commission under this section,
or an agreement under subsection (a) of this section
establishing a unit area under which waterflooding or other
recovery operations involving the introduction of extraneous
forms of energy into the pool have been conducted, may be
amended in the same manner and subject to the same conditions as
an original order or previous agreement: provided, (i) if the
amendment affects only the rights of owners, then consent to the
amendment by those persons who will be credited with unit
production or proceeds thereof free of cost shall not be
required; and (ii) no amendatory order shall change the
percentage for the allocation of oil and gas as established by
the original order or previous agreement, except with the
written consent of those persons who own at least eighty percent
(80%) of the unit production or proceeds thereof that will be
credited to royalty and overriding royalty interests which are
free of costs, and of those persons who will be required to pay
at least eighty percent (80%) of the cost of unit operations,
nor change the percentage for the allocation of costs as
established by the original order or previous agreement, except
with the written consent of those persons who own at least
eighty percent (80%) of the unit production or proceeds thereof
that will be credited to royalty and overriding royalty
interests which are free of costs, and of those persons who will
be required to pay at least eighty percent (80%) of the cost of
unit operations. However, to the extent that overriding royalty
interests are in excess of a total of twelve and one-half
percent (12 1/2%) of the production from any tract, such excess
interests shall not be considered in determining the percentage
of approval or ratification by such cost-free interests. If such
consent has not been obtained at the time the commission order
is made, the commission shall, upon application, hold such
supplemental hearings and make such findings as may be required
to determine when and if such consent has been obtained. Notice
of such supplemental hearing shall be given by regular mail at
least fifteen (15) days prior to such hearing to each person
owning interests in the oil and gas in the unit area whose name
and address was required by the provisions of paragraph (c)(ii)
of this section to be listed in the application for such unit
operations. If the required percentages of consent have not been
obtained within a period of six (6) months from and after the
date on which the order of approval is made, such order shall be
ineffective and revoked by the commission, unless, for good
cause shown, the commission extends that time. Any interested
person may file an application with the commission requesting an
order applicable only to the unit area described in the
application which shall provide for the percentage of approval
or ratification by either cost-free or cost-bearing interests,
or both, to be reduced from eighty percent (80%) to seventy-five
percent (75%). The application shall contain the information
required by subsection (c) of this section and any order of the
commission entered pursuant to the application must comply with
subsection (e) of this section. Notice of the hearing on the
application shall be given in the same manner and to the same
persons as required by subsection (d) of this section. If the
commission finds that negotiations were being conducted on the
effective date of this act or have been conducted for a period
of at least nine (9) months prior to the filing of the
application, that the applicant has participated in the
negotiations diligently and in good faith, and that the
percentage of approval or ratification required by this
subsection cannot be obtained, the commission may reduce any
percentage of approval or ratification required by this section
from eighty percent (80%) to seventy-five percent (75%). Such an
order shall affect only the unit area described in the
application and shall operate only to approve a proposed plan of
unitization and a proposed operating plan and to reduce the
required percentage of approval or ratification thereof and
shall not change any other requirement contained in this
section.
(j) Upon application by any interested person, the
commission, by order may, in the same manner and subject to the
same conditions as an original order, provide for the unit
operation of a pool or pools, or parts thereof, that embrace a
unit area established by a previous order of the commission or
that embrace a unit area previously established by a previous
agreement under which waterflooding or other recovery operations
involving the introduction of extraneous form of energy into the
pool have been conducted. Such order in providing for the
allocation of unit production, shall first treat the unit area
previously established as a single tract, and the portion of
unit production so allocated thereto shall then be allocated
among the separately owned tracts included in such previously
established unit area in the same proportions as those specified
in the previous order or such previous agreement as the case may
be.
(k) All operations, including, but not limited to, the
commencement, drilling, or operation of a well upon any portion
of the unit area for all purposes shall be deemed to be the
conduct of such operations upon each separately owned tract in
the unit area by the owner or owners thereof. The portion of the
unit production allocated to a separately owned tract in a unit
area shall, when produced, be deemed, for all purposes, to have
been actually produced from such tract by a well drilled
thereon. Operations conducted pursuant to an order of the
commission providing for unit operations shall constitute a
fulfillment of all the express or implied obligations of each
lease or contract covering lands in the unit area to the extent
that compliance with such obligations cannot be had because of
the orders of the commission. Whenever the commission enters an
order providing for a unit operation, any lease, other than a
state or federal lease, which covers lands that are in part
within the unit area embraced in any such plan of unitization
and that are in part outside of such unit area shall be
vertically segregated into separate leases, one (1) covering all
formations underlying the lands within such unit area and the
other covering all formations underlying the lands outside each
unit area, such segregation to be effective as of the
anniversary date of such lease next ensuing after the expiration
of ninety (90) days from the effective date of unitization;
provided, however, that any such segregated lease as to the
outside lands shall continue in force and effect for the primary
term thereof, but not for less than two (2) years from the date
of such segregation and so long thereafter as operations are
conducted under the provisions of the lease. If any such lease
provides for a lump-sum rental and if rentals become payable
under any segregated lease covering the outside land, such
lump-sum rental shall be prorated between such segregated leases
on an acreage basis.
(m) The portion of the unit production allocated to any
tract, and the proceeds from the sale thereof, shall be the
property and income of the several persons to whom, or to whose
credit, the same are allocated or payable under the order
providing for unit operations.
(n) No division order or other contract relating to the
sale or purchase of production from a separately owned tract
shall be terminated by the order providing for unit operations,
but shall remain in force and apply to oil and gas allocated to
such tract until terminated in accordance with the provisions
thereof.
(o) Except to the extent that the parties affected so
agree, no order providing for unit operations shall be construed
to result in a transfer of all or any part of the title of any
person to the oil and gas rights in any tract in the unit area.
All property, whether real or personal that may be acquired for
the account of the owners within the unit area, shall be the
property of such owners in the proportion that the expenses of
unit operations are charged.
(p) Subject to the limitations set forth in this section,
and to such further limitations as may be set forth in the plan
of unitization and operating plan, the operator of the unit
shall have a first and prior lien for costs incurred pursuant to
the plan of unitization and operating plan upon each owner's oil
and gas rights and his share of unitized production to secure
the payment of such owner's proportionate part of the costs of
developing and operating the unit area. The lien may be
established and enforced in the same manner as provided by W.S.
29-3-101 through 29-3-111. For such purposes any nonconsenting
owner shall be deemed to have contracted with the unit operator
for his proportionate part of the cost of developing and
operating the unit area. A transfer or conversion of any owner's
interest or any portion thereof however accomplished after the
effective date of the order creating the unit, shall not relieve
the transferred interest of said operator's lien on said
interest for the cost and expense of unit operations.
(q) Notwithstanding any other provisions in this section
to the contrary, any person who owns an interest in oil or gas
within the unit area which is not subject to an oil and gas
lease or similar contract, shall, with respect to seven-eighths
of the interest, be deemed to be an owner obligated to pay all
costs of unit operations attributable to the interest and shall
be deemed to be a royalty owner to the extent of one-eighth of
the interest free from the costs.
(r) The provisions of subsections (b) through (q) of this
section shall never be applicable for the purpose of:
(i) Changing the terms of unit agreements under which
waterflooding or other recovery operations involving the
introduction of extraneous forms of energy into a pool have been
conducted prior to the effective date of this section or
changing the rights of either any person who has executed or
ratified a preexisting unit agreement or any person who, being
qualified to become a party to a preexisting unit agreement and
having received an opportunity to become a party thereto, has
failed or refused to execute or ratify the agreement; or
(ii) Subjecting the interest of any person in the oil
and gas in the unit area to a unit agreement which allocates
unit production to such interest under a formula based solely
upon the surface acreage of the separate tracts within the unit
area.
(s) A certified copy of any order of the commission
entered under the provisions of this section shall be entitled
to be recorded in the office of the county clerk for the
counties where all or any portion of the unit area is located,
and such recordation shall constitute notice thereof to all
persons.
(t) If any section, subsection, sentence or clause of this
section is adjudged to be unconstitutional or invalid, such
adjudication shall not affect any other portions of this section
which can be given effect without the unconstitutional or
invalid provision, and to this end the provisions of this
section are severable.