Of all the legal contracts in the oil and gas industry, one of the most important is the agreement on the sharing of production. It is used by all parties as an instrument to achieve a quick return on their investments and to increase turnover as much as possible while spreading the risks. Problems arise when one of the mine owners or licensees in a wing crossed by one of these wells feels that his interests are poorly grouped or that the amount of production from the well assigned to his wing (and which forms the basis of his royalty payment) is inadequate. One way to mitigate this problem is for the interest owner to sign a production-sharing agreement („EPI“) in which the shareholder and the operator/tenant agree to a production allocation regime from the well concerned, since it also refers to the wing in which it holds an interest. Problems arise if not all rate holders sign an PPE. TennisDaze: Thank you for exchanging your knowledge. This now gives me more meaning and warns me against different scenarios. I called a lawyer. The property is SE/4 Of Section 7, Block C-5, PSL owned by several family members. Delaware Basin Resources LLC is neither my tenant nor its tenant. Austin Lee focuses his practice on representing and advising clients on the acquisition and sale of oil and gas properties, saltwater remediation facilities, storage, platforms and other facilities.
He also assists clients in all aspects of domestic and international oil and gas activity, from production to sales, including the negotiation and analysis of joint enterprise agreements; Operating agreements for units and units; collective development agreements, leasing and drilling operations, farms and other joint venture agreements; Leases Seismic data… At Browning Oil Co. v. Luecke The Austin Court of Appeal considered the standard that an operator/tenant will resist in terms of how production is distributed between undated wings. At Browning, the tenant had a horizontal well drilled on several ungoverned wings, and the court asked the lessor to pay the lenders` royalties on the basis of a „production determination that can reasonably be attributed to their wings.“  The IOC supports most or all of the costs and risks associated with exploration. The NOC begins or increases its contribution after the discovery of minerals and the site is developed into a normal operating production unit. The Texas Railway Commission (RRC) grants routine drilling permits to operators who wish to drill horizontally on several rental areas (or existing pooled units) that are not formally „pooled“ in existing oil and gas leases. Some of the most common situations in which these wells are drilled include cases where the pooling provisions of the underlying leases do not allow pooled units large enough to support the entire lateral length of the horizontal well in question, or where the leases on which the well is drilled do not provide for the right to pool at all.