[Code of Federal Regulations]
[Title 16, Volume 1]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 16CFR802.3]

[Page 604-605]
 
                     TITLE 16--COMMERCIAL PRACTICES
 
                   CHAPTER I--FEDERAL TRADE COMMISSION
 
PART 802_EXEMPTION RULES--Table of Contents
 
Sec. 802.3  Acquisitions of carbon-based mineral reserves.

    (a) An acquisition of reserves of oil, natural gas, shale or tar 
sands, or rights to reserves of oil, natural gas, shale or tar sands 
together with associated exploration or production assets shall be 
exempt from the requirements of the act if the value of the reserves, 
the rights and the associated exploration or production assets to be 
held as a result of the acquisition does not exceed $500 million. In an 
acquisition that includes reserves of oil, natural gas, shale or tar 
sands, or rights to reserves of oil, natural gas, shale or tar sands and 
associated exploration or production assets, the transfer of any other 
assets shall be subject to the requirements of the act and these rules 
as if they were being acquired in a separate acquisition.
    (b) An acquisition of reserves of coal, or rights to reserves of 
coal and associated exploration or production assets, shall be exempt 
from the requirements of the act if the value of the reserves, the 
rights and the associated exploration or production assets to be held as 
a result of the acquisition does not exceed $200 million. In an 
acquisition that includes reserves of coal, rights to reserves of coal 
and associated exploration or production assets, the transfer of any 
other assets shall be subject to the requirements of the act and these 
rules as if they were being acquired in a separate acquisition.
    (c) Associated exploration or production assets means equipment, 
machinery, fixtures and other assets that are integral and exclusive to 
current or future exploration or production activities associated with 
the carbon-based mineral reserves that are being acquired. Associated 
exploration or production assets do not include the following:
    (1) Any pipeline and pipeline system or processing facility which 
transports or processes oil and gas after it passes through the meters 
of a producing field located within reserves that are being acquired; 
and
    (2) Any pipeline or pipeline system that receives gas directly from 
gas wells for transportation to a natural gas processing facility or 
other destination.

    Examples: 1. ``A'' proposes to purchase from ``B'' for $550 million 
gas reserves that are not yet in production and have not generated any 
income. ``A'' will also acquire from ``B'' for $280 million producing 
oil reserves and associated assets such as wells, compressors, pumps and 
other equipment. The acquisition of the gas reserves is exempt as a 
transfer of unproductive property under Sec. 802.2(c). The acquisition 
of the oil reserves and associated assets is exempt pursuant to Sec. 
802.3(a), since the value of the reserves and associated assets does not 
exceed the $500 million limitation.
    2. ``A,'' an oil company, proposes to acquire for $180 million oil 
reserves currently in production along with field pipelines and treating 
and metering facilities which serve such reserves exclusively. The 
acquisition of the reserves and the associated assets are exempt. ``A'' 
will also acquire from ``B'' for $51 million a natural gas processing 
plant and its associated gathering pipeline system. This acquisition is 
not exempt since Sec. 802.3(c) excludes these assets from the exemption 
in Sec. 802.3 for transfers of associated exploration or production 
assets.
    3. ``A,'' an oil company, proposes to acquire a coal mine currently 
in operation and associated production assets for $90 million from 
``B,'' an oil company. ``A'' will also purchase from ``B'' producing oil 
reserves valued at $100 million and an oil refinery valued at $13 
million. The acquisition of the coal mine and the oil reserves is exempt 
pursuant to Sec. 802.3. Although Sec. 802.3(c) excludes the refinery 
from the exemption in Sec. 802.3 for transfers of associated 
exploration and production assets, ``A's'' acquisition of the refinery 
is not subject to the notification requirements of the act because its 
value does not exceed $50 million.
    4. ``X'' proposes to acquire from ``Z'' coal reserves which, 
together with associated exploration assets, are valued at $230 million. 
Since the value of the reserves and the assets exceeds the $200 million 
limitation in Sec. 802.3(b), this transaction is not exempt under Sec. 
802.3. However, if the coal reserves

[[Page 605]]

qualify as unproductive property under the requirements of Sec. 
802.2(c), their acquisition, along with the acquisition of their 
associated assets, would be exempt.

[61 FR 13688, Mar. 28, 1996, as amended at 66 FR 8692, Feb. 1, 2001]