Section

[Code of Federal Regulations]
[Title 43, Volume 2]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 43CFR3186.1]

[Page 442-459]

TITLE 43--PUBLIC LANDS: INTERIOR

CHAPTER II--BUREAU OF LAND MANAGEMENT, DEPARTMENT OF THE INTERIOR

PART 3180--ONSHORE OIL AND GAS UNIT AGREEMENTS: UNPROVEN AREAS--Table of Contents

Subpart 3186--Model Forms

Sec. 3186.1 Model onshore unit agreement for unproven areas.

Introductory Section

1 Enabling Act and Regulations.
2 Unit Area.
3 Unitized Land and Unitized Substances.
4 Unit Operator.
5 Resignation or Removal of Unit Operator.
6 Successor Unit Operator.
7 Accounting Provisions and Unit Operating Agreement.
8 Rights and Obligations of Unit Operator.
9 Drilling to Discovery.
10 Plan of Further Development and Operation.
11 Participation After Discovery.
12 Allocation of Production.
13 Development or Operation of Nonparticipating Land or Formations.
14 Royalty Settlement.
15 Rental Settlement.
16 Conservation.
17 Drainage.
18 Leases and Contracts Conformed and Extended.
19 Convenants Run with Land.
20 Effective Date and Term.
21 Rate of Prospecting, Development, and Production.
22 Appearances.
23 Notices.
24 No Waiver of Certain Rights.
25 Unavoidable Delay.
26 Nondiscrimination.
27 Loss of Title.

[[Page 443]]

28 Nonjoinder and Subsequent Joinder.
29 Counterparts.
30 Surrender. \1\
31 Taxes. \1\
32 No Partnership. \1\

Concluding Section IN WITNESS WHEREOF.

General Guidelines.

Certification--Determination.

UNIT AGREEMENT FOR THE DEVELOPMENT AND OPERATION OF THE

Unit area_______________________________________________________________
County of_______________________________________________________________
State of________________________________________________________________
No._____________________________________________________________________

This agreement, entered into as of the ------ day of ------, 19-- by
and between the parties subscribing, ratifying, or consenting hereto,
and herein referred to as the ``parties hereto,''
---------------------------------------------------------------------------

\1\ Optional sections (in addition the penultimate paragraph of
Section 9 is to be included only when more than one obligation well is
required and paragraph (h) of section 18 is to be used only when
applicable).

WITNESSETH:
WHEREAS, the parties hereto are the owners of working, royalty, or
other oil and gas interests in the unit area subject to this agreement;
and
WHEREAS, the Mineral Leasing Act of February 25, 1920, 41 Stat. 437,
as amended, 30 U.S.C. Sec. 181 et seq., authorizes Federal lessees and
their representatives to unite with each other, or jointly or separately
with others, in collectively adopting and operating under a unit plan of
development or operations of any oil and gas pool, field, or like area,
or any part thereof for the purpose of more properly conserving the
natural resources thereof whenever determined and certified by the
Secretary of the Interior to be necessary or advisable in the public
interest; and
WHEREAS, the parties hereto hold sufficient interests in the ------
---- Unit Area covering the land hereinafter described to give
reasonably effective control of operations therein; and
WHEREAS, it is the purpose of the parties hereto to conserve natural
resources, prevent waste, and secure other benefits obtainable through
development and operation of the area subject to this agreement under
the terms, conditions, and limitations herein set forth;
NOW, THEREFORE, in consideration of the premises and the promises
herein contained, the parties hereto commit to this agreement their
respective interests in the below-defined unit area, and agree severally
among themselves as follows:
1. ENABLING ACT AND REGULATIONS. The Mineral Leasing Act of February
25, 1920, as amended, supra, and all valid pertinent regulations
including operating and unit plan regulations, heretofore issued
thereunder or valid, pertinent, and reasonable regulations hereafter
issued thereunder are accepted and made a part of this agreement as to
Federal lands, provided such regulations are not inconsistent with the
terms of this agreement; and as to non-Federal lands, the oil and gas
operating regulations in effect as of the effective date hereof
governing drilling and producing operations, not inconsistent with the
terms hereof or the laws of the State in which the non-Federal land is
located, are hereby accepted and made a part of this agreement.
2. UNIT AREA. The area specified on the map attached hereto marked
Exhibit A is hereby designated and recognized as constituting the unit
area, containing ------ acres, more or less.
Exhibit A shows, in addition to the boundary of the unit area, the
boundaries and identity of tracts and leases in said area to the extent
known to the Unit Operator. Exhibit B attached hereto is a schedule
showing to the extent known to the Unit Operator, the acreage,
percentage, and kind of ownership of oil and gas interests in all lands
in the unit area. However, nothing herein or in Exhibits A or B shall be
construed as a representation by any party hereto as to the ownership of
any interest other than such interest or interests as are shown in the
Exhibits as owned by such party. Exhibits A and B shall be revised by
the Unit Operator whenever changes in the unit area or in the ownership
interests in the individual tracts render such revision necessary, or
when requested by the Authorized Officer, hereinafter referred to as AO
and not less than four copies of the revised Exhibits shall be filed
with the proper BLM office.

[[Page 444]]

The above-described unit area shall when practicable be expanded to
include therein any additional lands or shall be contracted to exclude
lands whenever such expansion or contraction is deemed to be necessary
or advisable to conform with the purposes of this agreement. Such
expansion or contraction shall be effected in the following manner:
(a) Unit Operator, on its own motion (after preliminary concurrence
by the AO), or on demand of the AO, shall prepare a notice of proposed
expansion or contraction describing the contemplated changes in the
boundaries of the unit area, the reasons therefor, any plans for
additional drilling, and the proposed effective date of the expansion or
contraction, preferably the first day of a month subsequent to the date
of notice.
(b) Said notice shall be delivered to the proper BLM office, and
copies thereof mailed to the last known address of each working interest
owner, lessee and lessor whose interests are affected, advising that 30
days will be allowed for submission to the Unit Operator of any
objections.
(c) Upon expiration of the 30-day period provided in the preceding
item (b) hereof, Unit Operator shall file with the AO evidence of
mailing of the notice of expansion or contraction and a copy of any
objections thereto which have been filed with Unit Operator, together
with an application in triplicate, for approval of such expansion or
contraction and with appropriate joinders.
(d) After due consideration of all pertinent information, the
expansion or contraction shall, upon approval by the AO, become
effective as of the date prescribed in the notice thereof or such other
appropriate date.
(e) All legal subdivisions of lands (i.e., 40 acres by Government
survey or its nearest lot or tract equivalent; in instances of irregular
surveys, unusually large lots or tracts shall be considered in multiples
of 40 acres or the nearest aliquot equivalent thereof), no parts of
which are in or entitled to be in a participating area on or before the
fifth anniversary of the effective date of the first initial
participating area established under this unit agreement, shall be
eliminated automatically from this agreement, effective as of said fifth
anniversary, and such lands shall no longer be a part of the unit area
and shall no longer be subject to this agreement, unless diligent
drilling operations are in progress on unitized lands not entitled to
participation on said fifth anniversary, in which event all such lands
shall remain subject hereto for so long as such drilling operations are
continued diligently, with not more than 90-days time elapsing between
the completion of one such well and the commencement of the next such
well. All legal subdivisions of lands not entitled to be in a
participating area within 10 years after the effective date of the first
initial participating area approved under this agreement shall be
automatically eliminated from this agreement as of said tenth
anniversary. The Unit Operator shall, within 90 days after the effective
date of any elimination hereunder, describe the area so eliminated to
the satisfaction of the AO and promptly notify all parties in interest.
All lands reasonably proved productive of unitized substances in paying
quantities by diligent drilling operations after the aforesaid 5-year
period shall become participating in the same manner as during said
first 5-year period. However, when such diligent drilling operations
cease, all nonparticipating lands not then entitled to be in a
participating area shall be automatically eliminated effective as the
91st day thereafter.
Any expansion of the unit area pursuant to this section which
embraces lands theretofore eliminated pursuant to this subsection 2(e)
shall not be considered automatic commitment or recommitment of such
lands. If conditions warrant extension of the 10-year period specified
in this subsection, a single extension of not to exceed 2 years may be
accomplished by consent of the owners of 90 percent of the working
interest in the current nonparticipating unitized lands and the owners
of 60 percent of the basic royalty interests (exclusive of the basic
royalty interests of the United States) in nonparticipating unitized
lands with approval of the AO, provided such extension application is
submitted not later

[[Page 445]]

than 60 days prior to the expiration of said 10-year period.
3. UNITIZED LAND AND UNITIZED SUBSTANCES. All land now or hereafter
committed to this agreement shall constitute land referred to herein as
``unitized land'' or ``land subject to this agreement.'' All oil and gas
in any and all formations of the unitized land are unitized under the
terms of this agreement and herein are called ``unitized substances.''
4. UNIT OPERATOR. ---------- is hereby designated as Unit Operator
and by signature hereto as Unit Operator agrees and consents to accept
the duties and obligations of Unit Operator for the discovery,
development, and production of unitized substances as herein provided.
Whenever reference is made herein to the Unit Operator, such reference
means the Unit Operator acting in that capacity and not as an owner of
interest in unitized substances, and the term ``working interest owner''
when used herein shall include or refer to Unit Operator as the owner of
a working interest only when such an interest is owned by it.
5. RESIGNATION OR REMOVAL OF UNIT OPERATOR. Unit Operator shall have
the right to resign at any time prior to the establishment of a
participating area or areas hereunder, but such resignation shall not
become effective so as to release Unit Operator from the duties and
obligations of Unit Operator and terminate Unit Operator's rights as
such for a period of 6 months after notice of intention to resign has
been served by Unit Operator on all working interest owners and the AO
and until all wells then drilled hereunder are placed in a satisfactory
condition for suspension or abandonment, whichever is required by the
AO, unless a new Unit Operator shall have been selected and approved and
shall have taken over and assumed the duties and obligations of Unit
Operator prior to the expiration of said period.
Unit Operator shall have the right to resign in like manner and
subject to like limitations as above provided at any time after a
participating area established hereunder is in existence, but in all
instances of resignation or removal, until a successor Unit Operator is
selected and approved as hereinafter provided, the working interest
owners shall be jointly responsible for performance of the duties of
Unit Operator, and shall not later than 30 days before such resignation
or removal becomes effective appoint a common agent to represent them in
any action to be taken hereunder.
The resignation of Unit Operator shall not release Unit Operator
from any liability for any default by it hereunder occurring prior to
the effective date of its resignation.
The Unit Operator may, upon default or failure in the performance of
its duties or obligations hereunder, be subject to removal by the same
percentage vote of the owners of working interests as herein provided
for the selection of a new Unit Operator. Such removal shall be
effective upon notice thereof to the AO.
The resignation or removal of Unit Operator under this agreement
shall not terminate its right, title, or interest as the owner of
working interest or other interest in unitized substances, but upon the
resignation or removal of Unit Operator becoming effective, such Unit
Operator shall deliver possession of all wells, equipment, materials,
and appurtenances used in conducting the unit operations to the new duly
qualified successor Unit Operator or to the common agent, if no such new
Unit Operator is selected to be used for the purpose of conducting unit
operations hereunder. Nothing herein shall be construed as authorizing
removal of any material, equipment, or appurtenances needed for the
preservation of any wells.
6. SUCCESSOR UNIT OPERATOR. Whenever the Unit Operator shall tender
his or its resignation as Unit Operator or shall be removed as
hereinabove provided, or a change of Unit Operator is negotiated by the
working interest owners, the owners of the working interests according
to their respective acreage interests in all unitized land shall,
pursuant to the Approval of the Parties requirements of the unit
operating agreement, select a successor Unit Operator. Such selection
shall not become effective until:
(a) a Unit Operator so selected shall accept in writing the duties
and responsibilities of Unit Operator, and

[[Page 446]]

(b) the selection shall have been approved by the AO.
If no successor Unit Operator is selected and qualified as herein
provided, the AO at his election may declare this unit agreement
terminated.
7. ACCOUNTING PROVISIONS AND UNIT OPERATING AGREEMENT. If the Unit
Operator is not the sole owner of working interests, costs and expenses
incurred by Unit Operator in conducting unit operations hereunder shall
be paid and apportioned among and borne by the owners of working
interests, all in accordance with the agreement or agreements entered
into by and between the Unit Operator and the owners of working
interests, whether one or more, separately or collectively. Any
agreement or agreements entered into between the working interest owners
and the Unit Operator as provided in this section, whether one or more,
are herein referred to as the ``unit operating agreement.'' Such unit
operating agreement shall also provide the manner in which the working
interest owners shall be entitled to receive their respective
proportionate and allocated share of the benefits accruing hereto in
conformity with their underlying operating agreements, leases, or other
independent contracts, and such other rights and obligations as between
Unit Operator and the working interest owners as may be agreed upon by
Unit Operator and the working interest owners; however, no such unit
operating agreement shall be deemed either to modify any of the terms
and conditions of this unit agreement or to relieve the Unit Operator of
any right or obligation established under this unit agreement, and in
case of any inconsistency or conflict between this agreement and the
unit operating agreement, this agreement shall govern. Two copies of any
unit operating agreement executed pursuant to this section shall be
filed in the proper BLM office prior to approval of this unit agreement.
8. RIGHTS AND OBLIGATIONS OF UNIT OPERATOR. Except as otherwise
specifically provided herein, the exclusive right, privilege, and duty
of exercising any and all rights of the parties hereto which are
necessary or convenient for prospecting for, producing, storing,
allocating, and distributing the unitized substances are hereby
delegated to and shall be exercised by the Unit Operator as herein
provided. Acceptable evidence of title to said rights shall be deposited
with Unit Operator and, together with this agreement, shall constitute
and define the rights, privileges, and obligations of Unit Operator.
Nothing herein, however, shall be construed to transfer title to any
land or to any lease or operating agreement, it being understood that
under this agreement the Unit Operator, in its capacity as Unit
Operator, shall exercise the rights of possession and use vested in the
parties hereto only for the purposes herein specified.
9. DRILLING TO DISCOVERY. Within 6 months after the effective date
hereof, the Unit Operator shall commence to drill an adequate test well
at a location approved by the AO, unless on such effective date a well
is being drilled in conformity with the terms hereof, and thereafter
continue such drilling diligently until the ------ formation has been
tested or until at a lesser depth unitized substances shall be
discovered which can be produced in paying quantities (to wit:
quantities sufficient to repay the costs of drilling, completing, and
producing operations, with a reasonable profit) or the Unit Operator
shall at any time establish to the satisfaction of the AO that further
drilling of said well would be unwarranted or impracticable, provided,
however, that Unit Operator shall not in any event be required to drill
said well to a depth in excess of ---- feet. Until the discovery of
unitized substances capable of being produced in paying quantities, the
Unit Operator shall continue drilling one well at a time, allowing not
more than 6 months between the completion of one well and the
commencement of drilling operations for the next well, until a well
capable of producing unitized substances in paying quantities is
completed to the satisfaction of the AO or until it is reasonably proved
that the unitized land is incapable of producing unitized substances in
paying quantities in the formations drilled hereunder. Nothing in this
section shall be deemed to limit the right of the Unit Operator to
resign as provided in Section 5, hereof, or as

[[Page 447]]

requiring Unit Operator to commence or continue any drilling during the
period pending such resignation becoming effective in order to comply
with the requirements of this section.
The AO may modify any of the drilling requirements of this section
by granting reasonable extensions of time when, in his opinion, such
action is warranted.
\2\ 9a. Multiple well requirements. Notwithstanding anything in this
unit agreement to the contrary, except Section 25, UNAVOIDABLE DELAY, --
-- wells shall be drilled with not more than 6-months time elapsing
between the completion of the first well and commencement of drilling
operations for the second well and with not more than 6-months time
elapsing between completion of the second well and the commencement of
drilling operations for the third well, . . . regardless of whether a
discovery has been made in any well drilled under this provision. Both
the initial well and the second well must be drilled in compliance with
the above specified formation or depth requirements in order to meet the
dictates of this section; and the second well must be located a minimum
of ---- miles from the initial well in order to be accepted by the AO as
the second unit test well, within the meaning of this section. The third
test well shall be diligently drilled, at a location approved by the AO,
to test the ------ formation or to a depth of ---- feet, whichever is
the lesser, and must be located a minimum of ---- miles from both the
initial and the second test wells. Nevertheless, in the event of the
discovery of unitized substances in paying quantities by any well, this
unit agreement shall not terminate for failure to complete the ------
well program, but the unit area shall be contracted automatically,
effective the first day of the month following the default, to eliminate
by subdivisions (as defined in Section 2(e) hereof) all lands not then
entitled to be in a participating area. \2\

\2\ Provisions to be included only when a multiple well obligation
is required.

Until the establishment of a participating area, the failure to
commence a well subsequent to the drilling of the initial obligation
well, or in the case of multiple well requirements, if specified,
subsequent to the drilling of those multiple wells, as provided for in
this (these) section(s), within the time allowed including any extension
of time granted by the AO, shall cause this agreement to terminate
automatically. Upon failure to continue drilling diligently any well
other than the obligation well(s) commenced hereunder, the AO may, after
15 days notice to the Unit Operator, declare this unit agreement
terminated. Failure to commence drilling the initial obligation well, or
the first of multiple obligation wells, on time and to drill it
diligently shall result in the unit agreement approval being declared
invalid ab initio by the AO. In the case of multiple well requirements,
failure to commence drilling the required multiple wells beyond the
first well, and to drill them diligently, may result in the unit
agreement approval being declared invalid ab initio by the AO;
10. PLAN OF FURTHER DEVELOPMENT AND OPERATION. Within 6 months after
completion of a well capable of producing unitized substances in paying
quantities, the Unit Operator shall submit for the approval of the AO an
acceptable plan of development and operation for the unitized land
which, when approved by the authorized officier, shall constitute the
further drilling and development obligations of the Unit Operator under
this agreement for the period specified therein. Thereafter, from time
to time before the expiration of any existing plan, the Unit Operator
shall submit for the approval of the AO a plan for an additional
specified period for the development and operation of the unitized land.
Subsequent plans should normally be filed on a calender year basis not
later than March 1 each year. Any proposed modification or addition to
the existing plan should be filed as a supplement to the plan.
Any plan submitted pursuant to this section shall provide for the
timely exploration of the unitized area, and for the diligent drilling
necessary for determination of the area or areas capable of producing
unitized substances in paying quantities in each and every productive
formation. This plan shall

[[Page 448]]

be as complete and adequate as the AO may determine to be necessary for
timely development and proper conservation of the oil and gas resources
in the unitized area and shall:
(a) Specify the number and locations of any wells to be drilled and
the proposed order and time for such drilling; and
(b) Provide a summary of operations and production for the previous
year.
Plans shall be modified or supplemented when necessary to meet
changed conditions or to protect the interests of all parties to this
agreement. Reasonable diligence shall be exercised in complying with the
obligations of the approved plan of development and operation. The AO is
authorized to grant a reasonable extension of the 6-month period herein
prescribed for submission of an initial plan of development and
operation where such action is justified because of unusual conditions
or circumstances.
After completion of a well capable of producing unitized substances
in paying quantities, no further wells, except such as may be necessary
to afford protection against operations not under this agreement and
such as may be specifically approved by the AO, shall be drilled except
in accordance with an approved plan of development and operation.
11. PARTICIPATION AFTER DISCOVERY. Upon completion of a well capable
of producing unitized substances in paying quantities, or as soon
thereafter as required by the AO, the Unit Operator shall submit for
approval by the AO, a schedule, based on subdivisions of the public-land
survey or aliquot parts thereof, of all land then regarded as reasonably
proved to be productive of unitized substances in paying quantities.
These lands shall constitute a participating area on approval of the AO,
effective as of the date of completion of such well or the effective
date of this unit agreement, whichever is later. The acreages of both
Federal and non-Federal lands shall be based upon appropriate
computations from the courses and distances shown on the last approved
public-land survey as of the effective date of each initial
participating area. The schedule shall also set forth the percentage of
unitized substances to be allocated, as provided in Section 12, to each
committed tract in the participating area so established, and shall
govern the allocation of production commencing with the effective date
of the participating area. A different participating area shall be
established for each separate pool or deposit of unitized substances or
for any group thereof which is produced as a single pool or zone, and
any two or more participating areas so established may be combined into
one, on approval of the AO. When production from two or more
participating areas is subsequently found to be from a common pool or
deposit, the participating areas shall be combined into one, effective
as of such appropriate date as may be approved or prescribed by the AO.
The participating area or areas so established shall be revised from
time to time, subject to the approval of the AO, to include additional
lands then regarded as reasonably proved to be productive of unitized
substances in paying quantities or which are necessary for unit
operations, or to exclude lands then regarded as reasonably proved not
to be productive of unitized substances in paying quantities, and the
schedule of allocation percentages shall be revised accordingly. The
effective date of any revision shall be the first of the month in which
the knowledge or information is obtained on which such revision is
predicated; provided, however, that a more appropriate effective date
may be used if justified by Unit Operator and approved by the AO. No
land shall be excluded from a participating area on account of depletion
of its unitized substances, except that any participating area
established under the provisions of this unit agreement shall terminate
automatically whenever all completions in the formation on which the
participating area is based are abandoned.
It is the intent of this section that a participating area shall
represent the area known or reasonably proved to be productive of
unitized substances in paying quantities or which are necessary for unit
operations; but, regardless of any revision of the participating area,
nothing herein contained shall be construed as requiring any retroactive

[[Page 449]]

adjustment for production obtained prior to the effective date of the
revision of the participating area.
In the absence of agreement at any time between the Unit Operator
and the AO as to the proper definition or redefinition of a
participating area, or until a participating area has, or areas have,
been established, the portion of all payments affected thereby shall,
except royalty due the United States, be impounded in a manner mutually
acceptable to the owners of committed working interests. Royalties due
the United States shall be determined by the AO and the amount thereof
shall be deposited, as directed by the AO, until a participating area is
finally approved and then adjusted in accordance with a determination of
the sum due as Federal royalty on the basis of such approved
participating area.
Whenever it is determined, subject to the approval of the AO, that a
well drilled under this agreement is not capable of production of
unitized substances in paying quantities and inclusion in a
participating area of the land on which it is situated is unwarranted,
production from such well shall, for the purposes of settlement among
all parties other than working interest owners, be allocated to the land
on which the well is located, unless such land is already within the
participating area established for the pool or deposit from which such
production is obtained. Settlement for working interest benefits from
such a nonpaying unit well shall be made as provided in the unit
operating agreement.
12. ALLOCATION OF PRODUCTION. All unitized substances produced from
a participating area established under this agreement, except any part
thereof used in conformity with good operating practices within the
unitized area for drilling, operating, and other production or
development purposes, or for repressuring or recycling in accordance
with a plan of development and operations that has been approved by the
AO, or unavoidably lost, shall be deemed to be produced equally on an
acreage basis from the several tracts of unitized land and unleased
Federal land, if any, included in the participating area established for
such production. Each such tract shall have allocated to it such
percentage of said production as the number of acres of such tract
included in said participating area bears to the total acres of unitized
land and unleased Federal land, if any, included in said participating
area. There shall be allocated to the working interest owner(s) of each
tract of unitized land in said participating area, in addition, such
percentage of the production attributable to the unleased Federal land
within the participating area as the number of acres of such unitized
tract included in said participating area bears to the total acres of
unitized land in said participating area, for the payment of the
compensatory royalty specified in section 17 of this agreement.
Allocation of production hereunder for purposes other than for
settlement of the royalty, overriding royalty, or payment out of
production obligations of the respective working interest owners,
including compensatory royalty obligations under section 17, shall be
prescribed as set forth in the unit operating agreement or as otherwise
mutually agreed by the affected parties. It is hereby agreed that
production of unitized substances from a participating area shall be
allocated as provided herein, regardless or whether any wells are
drilled on any particular part or tract of the participating area. If
any gas produced from one participating area is used for repressuring or
recycling purposes in another participating area, the first gas
withdrawn from the latter participating area for sale during the life of
this agreement shall be considered to be the gas so transferred, until
an amount equal to that transferred shall be so produced for sale and
such gas shall be allocated to the participating area from which
initially produced as such area was defined at the time that such
transferred gas was finally produced and sold.
13. DEVELOPMENT OR OPERATION OF NONPARTICIPATING LAND OR FORMATIONS.
Any operator may with the approval of the AO, at such party's sole risk,
costs, and expense, drill a well on the unitized land to test any
formation provided the well is outside any participating area
established for that formation, unless within 90 days of receipt of
notice from said party of

[[Page 450]]

his intention to drill the well, the Unit Operator elects and commences
to drill the well in a like manner as other wells are drilled by the
Unit Operator under this agreement.
If any well drilled under this section by a non-unit operator
results in production of unitized substances in paying quantities such
that the land upon which it is situated may properly be included in a
participating area, such participating area shall be established or
enlarged as provided in this agreement and the well shall thereafter be
operated by the Unit Operator in accordance with the terms of this
agreement and the unit operating agreement.
If any well drilled under this section by a non-unit operator that
obtains production in quantities insufficient to justify the inclusion
of the land upon which such well is situated in a participating area,
such well may be operated and produced by the party drilling the same,
subject to the conservation requirements of this agreement. The
royalties in amount or value of production from any such well shall be
paid as specified in the underlying lease and agreements affected.
14. ROYALTY SETTLEMENT. The United States and any State and any
royalty owner who is entitled to take in kind a share of the substances
now unitized hereunder shall be hereafter be entitled to the right to
take in kind its share of the unitized substances, and Unit Operator, or
the non-unit operator in the case of the operation of a well by a non-
unit operator as herein provided for in special cases, shall make
deliveries of such royalty share taken in kind in conformity with the
applicable contracts, laws, and regulations. Settlement for royalty
interest not taken in kind shall be made by an operator responsible
therefor under existing contracts, laws and regulations, or by the Unit
Operator on or before the last day of each month for unitized substances
produced during the preceding calendar month; provided, however, that
nothing in this section shall operate to relieve the responsible parties
of any land from their respective lease obligations for the payment of
any royalties due under their leases.
If gas obtained from lands not subject to this agreement is
introduced into any participating area hereunder, for use in
repressuring, stimulation of production, or increasing ultimate
recovery, in conformity with a plan of development and operation
approved by the AO, a like amount of gas, after settlement as herein
provided for any gas transferred from any other participating area and
with appropriate deduction for loss from any cause, may be withdrawn
from the formation into which the gas is introduced, royalty free as to
dry gas, but not as to any products which may be extracted therefrom;
provided that such withdrawal shall be at such time as may be provided
in the approved plan of development and operation or as may otherwise be
consented to by the AO as conforming to good petroleum engineering
practice; and provided further, that such right of withdrawal shall
terminate on the termination of this unit agreement.
Royalty due the United States shall be computed as provided in 30
CFR Group 200 and paid in value or delivered in kind as to all unitized
substances on the basis of the amounts thereof allocated to unitized
Federal land as provided in Section 12 at the rates specified in the
respective Federal leases, or at such other rate or rates as may be
authorized by law or regulation and approved by the AO; provided, that
for leases on which the royalty rate depends on the daily average
production per well, said average production shall be determined in
accordance with the operating regulations as though each participating
area were a single consolidated lease.
15. RENTAL SETTLEMENT. Rental or minimum royalties due on leases
committed hereto shall be paid by the appropriate parties under existing
contracts, laws, and regulations, provided that nothing herein contained
shall operate to relieve the responsible parties of the land from their
respective obligations for the payment of any rental or minimum royalty
due under their leases. Rental or minimum royalty for lands of the
United States subject to this agreement shall be paid at the rate
specified in the respective leases from the United States unless such
rental or

[[Page 451]]

minimum royalty is waived, suspended, or reduced by law or by approval
of the Secretary or his duly authorized representative.
With respect to any lease on non-Federal land containing provisions
which would terminate such lease unless drilling operations are
commenced upon the land covered thereby within the time therein
specified or rentals are paid for the privilege of deferring such
drilling operations, the rentals required thereby shall, notwithstanding
any other provision of this agreement, be deemed to accure and become
payable during the term thereof as extended by this agreement and until
the required drilling operations are commenced upon the land covered
thereby, or until some portion of such land is included within a
participating area.
16. CONSERVATION. Operations hereunder and production of unitized
substances shall be conducted to provide for the most economical and
efficient recovery of said substances without waste, as defined by or
pursuant to State or Federal law or regulation.
17. DRAINAGE. (a) The Unit Operator shall take such measures as the
AO deems appropriate and adequate to prevent drainage of unitized
substances from unitized land by wells on land not subject to this
agreement, which shall include the drilling of protective wells and
which may include the payment of a fair and reasonable compensatory
royalty, as determined by the AO.
(b) Whenever a participating area approved under section 11 of this
agreement contains unleased Federal lands, the value of 12\1/2\ percent
of the production that would be allocated to such Federal lands under
section 12 of this agreement, if such lands were leased, committed, and
entitled to participation, shall be payable as compensatory royalties to
the Federal Government. Parties to this agreement holding working
interests in committed leases within the applicable participating area
shall be responsible for such compensatory royalty payment on the volume
of production reallocated from the unleased Federal lands to their
unitized tracts under section 12. The value of such production subject
to the payment of said royalties shall be determined pursuant to 30 CFR
part 206. Payment of compensatory royalties on the production
reallocated from unleased Federal land to the committed tracts within
the participating area shall fulfill the Federal royalty obligation for
such production, and said production shall be subject to no further
royalty assessment under section 14 of this agreement. Payment of
compensatory royalties as provided herein shall accrue from the date the
committed tracts in the participating area that includes unleased
Federal lands receive a production allocation, and shall be due and
payable monthly by the last day of the calendar month next following the
calendar month of actual production. If leased Federal lands receiving a
production allocation from the participating area become unleased,
compensatory royalties shall accrue from the date the Federal lands
become unleased. Payment due under this provision shall end when the
unleased Federal tract is leased or when production of unitized
substances ceases within the participating area and the participating
area is terminated, whichever occurs first.
18. LEASES AND CONTRACTS CONFORMED AND EXTENDED. The terms,
conditions, and provisions of all leases, subleases, and other contracts
relating to exploration, drilling, development or operation for oil or
gas on lands committed to this agreement are hereby expressly modified
and amended to the extent necessary to make the same conform to the
provisions hereof, but otherwise to remain in full force and effect; and
the parties hereto hereby consent that the Secretary shall and by his
approval hereof, or by the approval hereof by his duly authorized
representative, does hereby establish, alter, change, or revoke the
drilling, producing, rental, minimum royalty, and royalty requirements
of Federal leases committed hereto and the regulations in respect
thereto to conform said requirements to the provisions of this
agreement, and, without limiting the generality of the foregoing, all
leases, subleases, and contracts are particularly modified in accordance
with the following:
(a) The development and operation of lands subject to this agreement
under the terms hereof shall be deemed full

[[Page 452]]

performance of all obligations for development and operation with
respect to each and every separately owned tract subject to this
agreement, regardless of whether there is any development of any
particular tract of this unit area.
(b) Drilling and producing operations performed hereunder upon any
tract of unitized lands will be accepted and deemed to be performed upon
and for the benefit of each and every tract of unitized land, and no
lease shall be deemed to expire by reason of failure to drill or produce
wells situated on the land therein embraced.
(c) Suspension of drilling or producing operations on all unitized
lands pursuant to direction or consent of the AO shall be deemed to
constitute such suspension pursuant to such direction or consent as to
each and every tract of unitized land. A suspension of drilling or
producing operations limited to specified lands shall be applicable only
to such lands.
(d) Each lease, sublease, or contract relating to the exploration,
drilling, development, or operation for oil or gas of lands other than
those of the United States committed to this agreement which, by its
terms might expire prior to the termination of this agreement, is hereby
extended beyond any such term so provided therein so that it shall be
continued in full force and effect for and during the term of this
agreement.
(e) Any Federal lease committed hereto shall continue in force
beyond the term so provided therein or by law as to the land committed
so long as such lease remains subject hereto, provided that production
of unitized substances in paying quantities is established under this
unit agreement prior to the expiration date of the term of such lease,
or in the event actual drilling operations are commenced on unitized
land, in accordance with provisions of this agreement, prior to the end
of the primary term of such lease and are being diligently prosecuted at
that time, such lease shall be extended for 2 years, and so long
thereafter as oil or gas is produced in paying quantities in accordance
with the provisions of the Mineral Leasing Act, as amended.
(f) Each sublease or contract relating to the operation and
development of unitized substances from lands of the United States
committed to this agreement, which by its terms would expire prior to
the time at which the underlying lease, as extended by the immediately
preceding paragraph, will expire is hereby extended beyond any such term
so provided therein so that it shall be continued in full force and
effect for and during the term of the underlying lease as such term is
herein extended.
(g) The segregation of any Federal lease committed to this agreement
is governed by the following provision in the fourth paragraph of sec.
17(m) of the Mineral Leasing Act, as amended by the Act of September 2,
1960 (74 Stat. 781-784) (30 U.S.C. 226(m)):
``Any [Federal] lease heretofore or hereafter committed to any such
[unit] plan embracing lands that are in part within and in part outside
of the area covered by any such plan shall be segregated into separate
leases as to the lands committed and the lands not committed as of the
effective date of unitization: Provided, however, That any such lease as
to the nonunitized portion shall continue in force and effect for the
term thereof but for not less than two years from the date of such
segregation and so long thereafter as oil or gas is produced in paying
quantities.''

If the public interest requirement is not satisfied, the segregation of
a lease and/or extension of a lease pursuant to 43 CFR 3107.3-2 and 43
CFR 3107.4, respectively, shall not be effective.
\3\ (h) Any lease, other than a Federal lease, having only a portion
of its lands committed hereto shall be segregated as to the portion
committed and the portion not committed, and the provisions of such
lease shall apply separately to such segregated portions commencing as
of the effective date hereof. In the event any such lease provides for a
lump-sum rental payment, such payment shall be prorated between the
portions so segregated in proportion to the acreage of the respective
tracts.

\3\ Optional paragraph to be used only when applicable.

[[Page 453]]

---------------------------------------------------------------------------

19. CONVENANTS RUN WITH LAND. The covenants herein shall be
construed to be covenants running with the land with respect to the
interests of the parties hereto and their successors in interest until
this agreement terminates, and any grant, transfer or conveyance of
interest in land or leases subject hereto shall be and hereby is
conditioned upon the assumption of all privileges and obligations
hereunder by the grantee, transferee, or other successor in interest. No
assignment or transfer of any working interest, royalty, or other
interest subject hereto shall be binding upon Unit Operator until the
first day of the calendar month after Unit Operator is furnished with
the original, photostatic, or certified copy of the instrument of
transfer.
20. EFFECTIVE DATE AND TERM. This agreement shall become effective
upon approval by the AO and shall automatically terminate 5 years from
said effective date unless:
(a) Upon application by the Unit Operator such date of expiration is
extended by the AO, or
(b) It is reasonably determined prior to the expiration of the fixed
term or any extension thereof that the unitized land is incapable of
production of unitized substances in paying quantities in the formations
tested hereunder, and after notice of intention to terminate this
agreement on such ground is given by the Unit Operator to all parties in
interest at their last known addresses, this agreement is terminated
with the approval of the AO, or
(c) A valuable discovery of unitized substances in paying quantities
has been made or accepted on unitized land during said initial term or
any extension thereof, in which event this agreement shall remain in
effect for such term and so long thereafter as unitized substances can
be produced in quantities sufficient to pay for the cost of producing
same from wells on unitized land within any participating area
established hereunder. Should production cease and diligent drilling or
reworking operations to restore production or new production are not in
progress within 60 days and production is not restored or should new
production not be obtained in paying quantities on committed lands
within this unit area, this agreement will automatically terminate
effective the last day of the month in which the last unitized
production occurred, or
(d) It is voluntarily terminated as provided in this agreement.
Except as noted herein, this agreement may be terminated at any time
prior to the discovery of unitized substances which can be produced in
paying quantities by not less than 75 per centum, on an acreage basis,
of the working interest owners signatory hereto, with the approval of
the AO. The Unit Operator shall give notice of any such approval to all
parties herto. If the public interest requirement is not satisfied, the
approval of this unit by the AO shall be invalid.
21. RATE OF PROSPECTING, DEVELOPMENT, AND PRODUCTION. The AO is
hereby vested with authority to alter or modify from time to time, in
his discretion, the quantity and rate of production under this agreement
when such quantity and rate are not fixed pursuant to Federal or State
law, or do not conform to any Statewide voluntary conservation or
allocation program which is established, recognized, and generally
adhered to by the majority of operators in such State. The above
authority is hereby limited to alteration or modifications which are in
the public interest. The public interest to be served and the purpose
thereof, must be stated in the order of alteration or modification.
Without regard to the foregoing, the AO is also hereby vested with
authority to alter or modify from time to time, in his discretion, the
rate of prospecting and development and the quantity and rate of
production under this agreement when such alteration or modification is
in the interest of attaining the conservation objectives stated in this
agreement and is not in violation of any applicable Federal or State
law.
Powers is the section vested in the AO shall only be exercised after
notice to Unit Operator and opportunity for hearing to be held not less
than 15 days from notice.
22. APPEARANCES. The Unit Operator shall, after notice to other
parties affected, have the right to appear for and on behalf of any and
all interests

[[Page 454]]

affected hereby before the Department of the Interior and to appeal from
orders issued under the regulations of said Department, or to apply for
relief from any of said regulations, or in any proceedings relative to
operations before the Department, or any other legally constituted
authority; provided, however, that any other interested party shall also
have the right at its own expense to be heard in any such proceeding.
23. NOTICES. All notices, demands, or statements required hereunder
to be given or rendered to the parties hereto shall be in writing and
shall be personally delivered to the party or parties, or sent by
postpaid registered or certified mail, to the last-known address of the
party or parties.
24. NO WAIVER OF CERTAIN RIGHTS. Nothing contained in this agreement
shall be construed as a waiver by any party hereto of the right to
assert any legal or constitutional right or defense as to the validity
or invalidity of any law of the State where the unitized lands are
located, or of the United States, or regulations issued thereunder in
any way affecting such party, or as a waiver by any such party of any
right beyond his or its authority to waive.
25. UNAVOIDABLE DELAY. All obligations under this agreement
requiring the Unit Operator to commence or continue drilling, or to
operate on, or produce unitized substances from any of the lands covered
by this agreement, shall be suspended while the Unit Operator, despite
the exercise of due care and diligence, is prevented from complying with
such obligations, in whole or in part, by strikes, acts of God, Federal,
State, or municipal law or agencies, unavoidable accidents,
uncontrollable delays in transportation, inability to obtain necessary
materials or equipment in the open market, or other matters beyond the
reasonable control of the Unit Operator, whether similar to matters
herein enumerated or not.
26. NONDISCRIMINATION. In connection with the performance of work
under this agreement, the Unit Operator agrees to comply with all the
provisions of section 202 (1) to (7) inclusive, of Executive Order 11246
(30 FR 12319), as amended, which are hereby incorporated by reference in
this agreement.
27. LOSS OF TITLE. In the event title to any tract of unitized land
shall fail and the true owner cannot be induced to join in this unit
agreement, such tract shall be automatically regarded as not committed
hereto, and there shall be such readjustment of future costs and
benefits as may be required on account of the loss of such title. In the
event of a dispute as to title to any royalty, working interest, or
other interests subject thereto, payment or delivery on account thereof
may be withheld without liability for interest until the dispute is
finally settled; provided, that, as to Federal lands or leases, no
payments of funds due the United States shall be withheld, but such
funds shall be deposited as directed by the AO, to be held as unearned
money pending final settlement of the title dispute, and then applied as
earned or returned in accordance with such final settlement.
Unit Operator as such is relieved from any responsibility for any
defect or failure of any title hereunder.
28. NONJOINDER AND SUBSEQUENT JOINDER. If the owner of any
substantial interest in a tract within the unit area fails or refuses to
subscribe or consent to this agreement, the owner of the working
interest in that tract may withdraw the tract from this agreement by
written notice delivered to the proper BLM office and the Unit Operator
prior to the approval of this agreement by the AO. Any oil or gas
interests in lands within the unit area not committed hereto prior to
final approval may thereafter be committed hereto by the owner or owners
thereof subscribing or consenting to this agreement, and, if the
interest is a working interest, by the owner of such interest also
subscribing to the unit operating agreement. After operations are
commenced hereunder, the right of subsequent joinder, as provided in
this section, by a working interest owner is subject to such
requirements or approval(s), if any, pertaining to such joinder, as may
be provided for in the unit operating agreement. After final

[[Page 455]]

approval hereof, joinder by a nonworking interest owner must be
consented to in writing by the working interest owner committed hereto
and responsible for the payment of any benefits that may accrue
hereunder in behalf of such nonworking interest. A nonworking interest
may not be committed to this unit agreement unless the corresponding
working interest is committed hereto. Joinder to the unit agreement by a
working interest owner, at any time, must be accompanied by appropriate
joinder to the unit operating agreement, in order for the interest to be
regarded as committed to this agreement. Except as may otherwise herein
be provided, subsequent joinders to this agreement shall be effective as
of the date of the filing with the AO of duly executed counterparts of
all or any papers necessary to establish effective commitment of any
interest and/or tract to this agreement.
29. COUNTERPARTS. This agreement may be executed in any number of
counterparts, no one of which needs to be executed by all parties, or
may be ratified or consented to by separate instrument in writing
specifically referring hereto and shall be binding upon all those
parties who have executed such a counterpart, ratification, or consent
hereto with the same force and effect as if all such parties had signed
the same document, and regardless of whether or not it is executed by
all other parties owning or claiming an interest in the lands within the
above-described unit area.
\4\ 30. SURRENDER. Nothing in this agreement shall prohibit the
exercise by any working interest owner of the right to surrender vested
in such party by any lease, sublease, or operating agreement as to all
or any part of the lands covered thereby, provided that each party who
will or might acquire such working interest by such surrender or by
forfeiture as hereafter set forth, is bound by the terms of this
agreement.
---------------------------------------------------------------------------

\4\ Optional sections and subsection. (Agreements submitted for
final approval should not identify section or provision as
``optional.'')
---------------------------------------------------------------------------

If as a result of any such surrender, the working interest rights as
to such lands become vested in any party other than the fee owner of the
unitized substances, said party may forfeit such rights and further
benefits from operations hereunder as to said land to the party next in
the chain of title who shall be and become the owner of such working
interest.
If as the result of any such surrender or forfeiture working
interest rights become vested in the fee owner of the unitized
substances, such owner may:
(a) Accept those working interest rights subject to this agreement
and the unit operating agreement; or
(b) Lease the portion of such land as is included in a participating
area established hereunder subject to this agreement and the unit
operating agreement; or
(c) Provide for the independent operation of any part of such land
that is not then included within a participating area established
hereunder.
If the fee owner of the unitized substances does not accept the
working interest rights subject to this agreement and the unit operating
agreement or lease such lands as above provided within 6 months after
the surrendered or forfeited, working interest rights become vested in
the fee owner; the benefits and obligations of operations accruing to
such lands under this agreement and the unit operating agreement shall
be shared by the remaining owners of unitized working interests in
accordance with their respective working interest ownerships, and such
owners of working interests shall compensate the fee owner of unitized
substances in such lands by paying sums equal to the rentals, minimum
royalties, and royalties applicable to such lands under the lease in
effect when the lands were unitized.
An appropriate accounting and settlement shall be made for all
benefits accruing to or payments and expenditures made or incurred on
behalf of such surrendered or forfeited working interests subsequent to
the date of surrender or forfeiture, and payment of any moneys found to
be owing by such an accounting shall be made as between the parties
within 30 days.

[[Page 456]]

The exercise of any right vested in a working interest owner to
reassign such working interest to the party from whom obtained shall be
subject to the same conditions as set forth in this section in regard to
the exercise of a right to surrender.
\4\ 31. TAXES. The working interest owners shall render and pay for
their account and the account of the royalty owners all valid taxes on
or measured by the unitized substances in and under or that may be
produced, gathered and sold from the land covered by this agreement
after its effective date, or upon the proceeds derived therefrom. The
working interest owners on each tract shall and may charge the proper
proportion of said taxes to royalty owners having interests in said-
tract, and may currently retain and deduct a sufficient amount of the
unitized substances or derivative products, or net proceeds thereof,
from the allocated share of each royalty owner to secure reimbursement
for the taxes so paid. No such taxes shall be charged to the United
States or the State of ---- or to any lessor who has a contract with his
lessee which requires the lessee to pay such taxes.
\4\ 32. NO PARTNERSHIP. It is expressly agreed that the relation of
the parties hereto is that of independent contractors and nothing
contained in this agreement, expressed or implied, nor any operations
conducted hereunder, shall create or be deemed to have created a
partnership or association between the parties hereto or any of them.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be executed and have set opposite their respective names the date of
execution.

________________________________________________________________________

Unit Operator

________________________________________________________________________

Working Interest Owners

________________________________________________________________________

Other Interest Owners

General Guidelines

1. Executed agreement to be legally complete.
2. Agreement submitted for approval must contain Exhibit A and B in
accordance with models shown in Secs. 3186.1-1 and 3186.1-2 of this
title.
3. Consents should be identified (in pencil) by tract numbers as
listed in Exhibit B and assembled in that order as far as practical.
Unit agreements submitted for approval shall include a list of the
overriding royalty interest owners who have executed ratifications of
the unit agreement. Subsequent joinders by overriding royalty interest
owners shall be submitted in the same manner, except each must include
or be accompanied by a statement that the corresponding working interest
owner has consented in writing to such joinder. Original ratifications
of overriding royalty owners will be kept on file by the Unit Operator
or his designated agent.
4. All leases held by option should be noted on Exhibit B with an
explanation as to the type of option, i.e., whether for operating rights
only, for full leasehold record title, or for certain interests to be
earned by performance. In all instances, optionee committing such
interests is expected to exercise option promptly.
5. All owners of oil and gas interests must be invited to join the
unit agreement, and statement to that effect must accompany executed
agreement, together with summary of results of such invitations. A
written reason for all interest owners who have not joined shall be
furnished by the unit operator.
6. In the event fish and wildlife lands are included, add the
following as a separate section:
``Wildlife Stipulation. Nothing in this unit agreement shall modify
the special Federal lease stipulations applicable to lands under the
jurisdiction of the United States Fish and Wildlife Service.''
7. In the event National Forest System lands are included within the
unit area, add the following as a separate section:
``Forest Land Stipulation. Notwithstanding any other terms and
conditions contained in this agreement, all of the stipulations and
conditions of the individual leases between the United States and its
lessees or their successors or assigns embracing lands within the unit
area included for the protection of lands or functions under the
jurisdiction of the Secretary of Agriculture shall remain in full force
and effect the same as though this agreement had not been entered into,
and no modification thereof is authorized except with the prior consent
in writing of the Regional Forester, United States Forest Service, ----
--,

.''_____________________________________________________________________

8. In the event National Forest System lands within the Jackson Hole
Area of Wyoming are included within the unit area, additional
``special'' stipulations may be required to be included in the unit
agreement

[[Page 457]]

by the U.S. Forest Service, including the Jackson Hole Special
Stipulation.
9. In the event reclamation lands are included, add the following as
a new separate section:
``Reclamation Lands. Nothing in this agreement shall modify the
special, Federal lease stipulations applicable to lands under the
jurisdiction of the Bureau of Reclamation.''
10. In the event a powersite is embraced in the proposed unit area,
the following section should be added:
``Powersite. Nothing in this agreement shall modify the special,
Federal lease stipulations applicable to lands under the jurisdiction of
the Federal Energy Regulatory Commission.''
11. In the event special surface stipulations have been attached to
any of the Federal oil and gas leases to be included, add the following
as a separate section:
``Special surface stipulations. Nothing in this agreement shall
modify the special Federal lease stipulations attached to the individual
Federal oil leases.''
12. In the event State lands are included in the proposed unit area,
add the appropriate State Lands Section as separate section.
(See Sec. 3181.4(a) of this title).
13. In the event restricted Indian lands are involved, consult the
AO regarding appropriate requirements under Sec. 3181.4(b) of this
title.

Certification--Determination

Pursuant to the authority vested in the Secretary of the Interior,
under the Act approved February 25, 1920, 41 Stat. 437, as amended, 30
U.S.C. sec. 181, et seq., and delegated to (the appropriate Name and
Title of the authorized officer, BLM) under the authority of 43 CFR part
3180, I do hereby:
A. Approve the attached agreement for the development and operation
of the ----, Unit Area, State of ------. This approval shall be invalid
ab initio if the public interest requirement under Sec. 3183.4(b) of
this title is not met.
B. Certify and determine that the unit plan of development and
operation contemplated in the attached agreement is necessary and
advisable in the public interest for the purpose of more properly
conserving the natural resources.
C. Certify and determine that the drilling, producing, rental,
minimum royalty, and royalty requirements of all Federal leases
committed to said agreement are hereby established altered, changed, or
revoked to conform with the terms and conditions of this agreement.
Dated --------.
________________________________________________________________________
(Name and Title of authorized officer of the Bureau of Land Management)

[48 FR 26766, June 10, 1983. Redesignated and amended at 48 FR 36587,
36588, Aug. 12, 1983; 53 FR 17365, May 16, 1988; 53 FR 31867, 31959,
Aug. 22, 1988; 58 FR 58633, Nov. 2, 1993; 59 FR 16999, Apr. 11, 1994]

[[Page 458]]

Sec. 3186.1-1 Model Exhibit ``A''.
[GRAPHIC] [TIFF OMITTED] TC01FE91.054

[[Page 459]]

Sec. 3186.1-2 Model Exhibit ``B''.

Swan Unit Area, Campbell County, Wyoming
----------------------------------------------------------------------------------------------------------------
Serial No. and Basic royalty Overriding Working
Tract Description of No. of expiration and ownership Lessee of royalty and interest and
No. land acres date of lease percentage record percentage percentage
----------------------------------------------------------------------------------------------------------------
All in the area
of T54N-R59W,
6th P.M..
Federal Land
1..... Sec. 14: All.... 1,920.00 W-8470, 6-30- U.S.: All..... T.J. Cook 100% T.J. Cook 2%. Frost Oil Co.
81. 100%.
Sec. 15: All....
Sec. 23: All....
2..... Sec. 35: All.... 640.00 W-9123, 7-31- U.S.: All..... O.M. Odom 100% O.M. Odom 1%. Deer Oil Co.
81. 100%.
3..... Sec. 21: All.... 1,280.00 W-41345, 6-30- U.S.: All..... Max Pen 50%... Max Pen 1%... Frost Oil Co.
85. 100%.
Sec. 28: All.... ........ .............. .............. Sam Small 50%. Sam Small 1%. .............
4..... Sec. 27: All.... 1,280.00 W-41679, 6-30- U.S.: All..... Al Preen 100%. Al Preen 2%.. Deer Oil Co.
85. 50%.
.... ................ ........ .............. .............. .............. ............. Doe Oil
Co.,30%
.... ................ ........ .............. .............. .............. ............. Able Drilling
Co. 20%.
Sec. 33: All.... ........ .............. .............. .............. ............. Deer Oil Co.
50%.
.... ................ ........ .............. .............. .............. ............. Doe Oil Co.,
30%
.... ................ ........ .............. .............. .............. ............. Able Drilling
Co. 20%.
5..... Sec. 26: All.... 961.50 W-52780,12-31- U.S.: All..... Deer Oil Co. J.G. Goodin Deer Oil Co.
85. 100%. 2%. 100%.
Sec. 25: Lots
3,4, SW\1/4\,
W\1/2\SE\1/4\.
6..... Sec. 24: Lots 965.80 W-53970, 2-28- U.S.: All..... T.H. Holder ............. T.H. Holder
1,2,3,4,W\1/2\, 86. 100%. 100%.
W\1/2\E\1/2\
(All).
Sec. 25: Lots
1,2,NW\1/4\,
W\1/2\NE/4.
6 Federal tracts
totalling
7,047.30 acres
or 68.76018% of
unit area.
State Land
7..... Sec. 16: All.... 1,280.60 78620, 6-30-88 State: All.... Deer Oil Co. T.T. Timo 2%. Deer Oil Co.
100%. 100%.
Sec. 36: Lots 1,
2, 3, 4, W\1/
2\, W\1/2\E\1/
2\ (All).
1 State tract
totalling
1,280.60 acres
or 12.49476% of
unit area..
Patented Land
8..... Sec. 13: Lots 1, 641.20 5-31-82....... J.C. Smith: Doe Oil Co. ............. Doe Oil Co.
2, 3, 4, W\1/ 100%. 100%. 100%.
2\, W\1/2\E\1/
2\ (All).
9..... Sec. 22: All.... 640.00 5-31-82....... T.J. Cook: W.W. Smith Sam Spade 1%. W.W. Smith
100%. 100%. 100%.
10.... Sec. 34: All.... 640.00 6-30-82....... A.A. Aben: Deer Oil Co. ............. Deer Oil Co.
75%, L.P. 100%. 100%.
Carr: 25%.
3 Patented
tracts
totalling
1,921.20 acres
or 18.74506% of
unit area.
Total: 10 tracts 10,249.10 acres in entire unit area.
----------------------------------------------------------------------------------------------------------------

[48 FR 26766, June 10, 1983. Redesignated at 48 FR 36587, Aug. 12, 1983,
and amended at 51 FR 34604, Sept. 30, 1986]

[[Page 460]]