SLS 16RS-684 ORIGINAL
2016 Regular Session
SENATE BILL NO. 388
BY SENATOR CORTEZ
MINERALS. Provides relative to agreements for drilling units. (gov sig)
1 AN ACT
2 To amend and reenact R.S. 30:10(A)(2)(a)(i), (b)(i), (c) and (d)(i), relative to the office of
3 conservation; to provide for agreements for drilling units; to provide for pooling
4 interests; to provide for notice requirements; to provide for the timely payment of
5 drilling costs; to provide terms and conditions; and to provide for related matters.
6 Be it enacted by the Legislature of Louisiana:
7 Section 1. R.S. 30:10(A)(2)(a)(i), (b)(i), (c) and (d)(i) are hereby amended and
8 reenacted to read as follows:
9 ยง10. Agreements for drilling units; pooling interests; terms and conditions; expenses
10 A. * * *
11 (2) * * *
12 (a)(i) Any owner drilling or intending to drill a unit well, a substitute unit
13 well, an alternate unit well, or a cross-unit well on any drilling unit heretofore or
14 hereafter created by the commissioner, may, by registered mail, return receipt
15 requested, or other form of guaranteed delivery and notification method, not
16 including electronic communication or mail, notify all other owners in the unit prior
17 to the actual spudding of any such well of the drilling or the intent to drill and give
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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions. SB NO. 388
SLS 16RS-684 ORIGINAL
1 each owner an opportunity to elect to participate in the risk and expense of such well.
2 Such notice shall contain:
3 * * *
4 (b)(i) Should a notified owner elect not to participate in the risk and expense
5 of the unit well, substitute unit well, alternate unit well, or cross-unit well or should
6 such owner elect to participate in the risk and expense of the proposed well but then
7 fail to pay his share of the estimated drilling costs determined by the AFE within
8 sixty days of the spudding of the well timely or fail to pay his share of subsequent
9 actual reasonable drilling, completion, testing, completing, equipping, and
10 operating expenses within sixty days of receipt of subsequent detailed invoices, then
11 such owner shall be deemed a nonparticipating owner, and the drilling owner shall,
12 in addition to any other available legal remedies to enforce collection of such
13 expenses, be entitled to own and recover out of production from such well allocable
14 to the tract under lease to the nonparticipating owner such tract's allocated share of
15 the actual reasonable expenditures incurred in drilling, testing, completing,
16 equipping, and operating the well, including a charge for supervision, together with
17 a risk charge. For purposes of this Subparagraph, the payment of estimated
18 drilling costs shall be deemed timely if received by the drilling owner within
19 sixty days of the actual spudding of the well or the receipt by the notified owner
20 of the notice required by this Subsection, whichever is later. The risk charge for
21 a unit well, substitute unit well, or cross-unit well that will serve as the unit well or
22 substitute well for the unit shall be two hundred percent of such tract's allocated
23 share of the cost of drilling, testing, and completing the well, exclusive of amounts
24 the drilling owner remits to the nonparticipating owner for the benefit of the
25 nonparticipating owner's royalty and overriding royalty owner. The risk charge for
26 an alternate unit well or cross-unit well that will serve as an alternate unit well for
27 the unit shall be one hundred percent of such tract's allocated share of the cost of
28 drilling, testing, and completing such well, exclusive of amounts the drilling owner
29 remits to the nonparticipating owner for the benefit of the nonparticipating owner's
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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions. SB NO. 388
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1 royalty and overriding royalty owner.
2 * * *
3 (c) Should a drilling unit be created by order of the commissioner around a
4 well already drilled or drilling and including one or more tracts as to which the
5 owner or owners thereof had not participated in the risk and expense of drilling such
6 well, then within sixty days of the date of the order creating such unit the provisions
7 of this Subsection for notice, election, and participation shall be applicable as if a
8 well were being proposed by the owner who drilled or was drilling such well;
9 however, the cost of drilling, testing, completing, equipping, and operating the well
10 allocable to each tract included in the unit shall be reduced in the same proportion
11 as the recoverable reserves in the unitized pool have been recovered by prior
12 production, if any, in which said tract or tracts did not participate prior to
13 determining the share of cost allocable to such tract or tracts.
14 (d)(i) Should a drilling unit be revised by order of the commissioner so as to
15 include an additional tract or tracts, then within sixty days of the date of the order
16 revising such unit the provisions of this Subsection for notice, election, and
17 participation shall be applicable to such added tract or tracts and the owner thereof
18 as if a well were being proposed by the owner who had drilled the well; however, the
19 cost of drilling, testing, completing, equipping, and operating the unit well shall be
20 reduced in the same proportion as the recoverable reserves in the unitized pool have
21 been recovered by prior production, if any, in which said tract or tracts did not
22 participate prior to determining the share of cost allocable to the subsequently
23 included tract or tracts.
24 * * *
25 Section 2. This Act shall become effective upon signature by the governor or, if not
26 signed by the governor, upon expiration of the time for bills to become law without signature
27 by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
28 vetoed by the governor and subsequently approved by the legislature, this Act shall become
29 effective on the day following such approval.
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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions. SB NO. 388
SLS 16RS-684 ORIGINAL
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Alan Miller.
DIGEST
SB 388 Original 2016 Regular Session Cortez
Present law authorizes an owner drilling or intending to drill a unit well, a substitute unit
well, an alternate unit well, or a cross-unit well on any drilling unit heretofore or hereafter
created by the commissioner, may, by registered mail, return receipt requested, or other form
of guaranteed delivery and notification method, not including electronic communication or
mail, to notify all other owners in the unit prior to the actual spudding of any such well of
the drilling or the intent to drill and give each owner an opportunity to elect to participate
in the risk and expense of such well.
Proposed law eliminates the notification provision to all other owners in the unit prior to the
actual spudding of the well.
Proposed law requires the payment of estimated drilling costs be deemed timely if received
by the drilling owner within 60 days of the spudding of the well or the receipt by the notified
owner of the notice provided for in present law, whichever is later.
Present law provides for a drilling unit being created around certain wells and for a drilling
unit being revised. The owners will have 60 days from the order creating the new or revised
unit to participate in the well.
Proposed law removes the 60-day provision.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Amends R.S. 30:10(A)(2)(a)(i), (b)(i), (c) and (d)(i))
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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.