Oil & Gas Conservation Getting a Well Drilled and Spacing

1. Oil & Gas Conservation Getting a Well Drilled and Spacing Eric R. King

2. Intent to DrillOAC Form 1000

3. Geologic Mapping

4. Geological exhibit structure and isopach map

5. Isopach map

6. Bonded Operator • Requirements: • Operator’s Agreement • OAC 165:10-1-10 • Category “A” Surety • Category “B” Surety • Financial Statement as Surety • OAC 165:10-1-11

7. Corporate Surety Bond • OAC 165:10-1-12 • Irrevocable Commercial Letter of Credit • OAC 165-10-1-13 • Cashier’s Check, Certificate of Deposit etc. • OAC 165-10-1-14

8. Completing a Well

9. Completion ReportOAC Form 1002A

10. Initial One Point TestOAC Form 1016

11. Annual One Point TestOAC Form 1017

12. Conservation • 52 O.S. 87.1 • Common Source of Supply of Oil • Well Spacing and Drilling Units

13. Spacing • Actual Notice at least 15 days prior to Hearing to all parties who have the right to share in production • File Application • Notice Regular Mail at least 15 days before Hearing • Publication Notice – At least 15 days in County where Land is situated and Oklahoma County before the Hearing • Hearing • Issues

14. General Well Spacing Requirements OAC 165:10-1-21 • Any unspaced common source of supply 2,500 feet or more in depth – No closer than 330 feet from any property line or 600 feet from any drilling or producing oil or gas well from the same formation • Any unspaced common source of supply 2,500 feet or less in depth – No closer than 165 feet from any property line or 300 feet from any drilling or producing oil or gas well from the same formation

15. Drilling and Spacing Units OAC 165: 10-1-22 (a) The Commission may establish drilling and spacing units in any common source of supply a s provided by law, and the special orders creating drilling and spacing units shall supersede the provisions of 165:10-1-21. It shall be The responsibility of any operator who proposes to drill a well to ascertain the existence and provisions of special spacing orders. (b) The drilling of a well or wells in to a common source of supply in an area covered by an application pending before the Commission see king the establishment of drilling and spacing units is prohibited except by special order of the Commission. However, if an Intent to Drill (Form 1000) has been approved by the Commission and operations commenced prior to the filing of a spacing application, the operator shall be permitted to drill and complete the well without a special order of the Commission.

16. Permitted Well Locations Within Standard Drilling and Spacing Units OAC 165: 10-1-24 • (a) The permitted well location within any standard square drilling and spacing unit shall be the center of the unit. The permitted well locations within standard rectangular drilling and spacing units shall be the centers of alternate square tracts constituting the units (alternate halves of the units); provided, however, a well will be deemed drilled at the permitted location if drilled within the following tolerance areas:

17. (1) Not less than 165 feet from the boundary of any standard 10-acre drilling and spacing unit or the proper square 10-acre tract within any standard 20-acre drilling and spacing unit. • (2) Not less than 330 feet from the boundary of any standard 40-acre drilling and spacing unit or the proper square 40-acre tract within any standard 80-acre drilling and spacing unit. • (3) Not less than 660-feet from the boundary of any standard 160-acre drilling and spacing unit or the proper square 160-acre tract within any standard 320-acre drilling and spacing unit. • (4 ) Not less than 1320 feet from the boundary of any standard 640-acre drilling and spacing unit.

18. A Township - 36 Sections of Land

19. 640 acres (Section)

20. 320 acres (Half Section)

21. 160 acres (Quarter Section)

22. Drilling and Spacing Units • A Township - 36 Sections of Land • Size of Drilling and Spacing Units • 80 acres – Stand-Up or Lay-Down Units • 40 acres (Quarter Quarter Section) • 20 acres Stand-Up or Lay-Down Units • 10 acres (Quarter Quarter Quarter Section)

23. Proper Well Location Requirements(Continued) • 640 acres - No closer than 1320 feet from unit boundaries • 320 acres - Stand-Up or Lay-Down Units – No closer than 660 feet from proper Quarter Section i.e. on NW-SE proper location within each 320 acre unit (or can be NE-SW) • 160 acres –No closer than 660 from unit boundaries • 80 acres – Stand-Up or Lay-Down Units – No closer than 330 feet from proper Quarter Quarter Section i.e. on NW-SE proper location within each 80 acre unit (or can be NE-SW)

24. Proper Well Location Requirements continued • 40 acres No closer than 330 feet from unit boundary • 20 acres Stand-Up or Lay-Down Units - No closer than 165 feet from proper Quarter Quarter Section i.e. on NW-SE proper location within each 20 acre unit (or can be NE-SW) • 10 acres – No closer than 165 feet from unit boundary

25. Engineering Exhibits

31. Law of Capture • Texas – Oil and Gas in Place • Oklahoma – Whatever Oil and Gas can be “captured” or “found and reduced to possession” through your wellbore • Cannot take more than your “fair share” by Statute (52 O.S. 87.1) • OGIP (Original Gas in Place) • Uncompensated Drainage – Issues

32. Eric R. King GableGotwals aJunk Professor 