BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOM A APPLICANT : RELIEF SOUGHT : ALTA MESA RESOURCES, INC. AMENDMENT TO PLAN OF UNITIZATION AND DETERMINATION OF C O N T I N U E D EFFECTIVENESS OF ORDER NO. 119269- LINCOLN NORTH UNIT CAUSE CD NO. 20010121 7 LEGAL DESCRIPTION : ALL OF SECTIONS 27, 28, 29, 30, 31, 32, 33 AND THE W/2 OF SECTION 34, TOWNSHIP 18 NORTH, RANGE 5 WEST ; AND THE E/2 NE/4 AND THE S/2 OF SECTION 25, AND THE SE/4 OF SECTION 26, AND ALL OF SECTIONS 34, 35 AND 36, TOWNSHIP 18 NORTH, RANGE 6 WEST ; AND LOTS 3 AND 4, AND THE S/2 NW/4 AND THE SW/4 OF SECTION 3, AND ALL OF SECTIONS 4, 5 AND 6, TOWNSHIP 17 NORTH, RANGE 5 WEST ; AND ALL OF SECTIONS 1, 2, 3, 10 AND 11, AND THE W/2 AND THE W/2 SE/4 OF SECTION 12, AND THE W/2 NE/4 AND THE W/2 SE/4 AND THE W/2 OF SECTION 13, AND THE N/2 AND THE SW/4 AND THE N/2 SE/4 OF SECTION 14, AND THE E/2 OF SECTION 15, TOWNSHIP ] 7 NORTH, RANGE 6 WEST, ALL IN KINGFISHER COUNTY, OKLAHOMA ORDER NO. 450744 ORDER OF THE COMMISSION This Cause came on for hearing before Connie K. Moore, Administrative Law Judge for the Corporation Commission of Oklahoma, on the 27th day of March, 2001, at 8 :30 a.m., in the Commission Cour troom, Jim Thorpe Building, Oklahoma C ity, Oklahoma, for the purpose of hearing, taking testimony and reporting her findings and recommendations to the Commission.
CAUSE CD NO. 20010121 7 APPLICANT : ALTA MESA RESOURCES. INC. Richard A. Grimes, Attorney, appeared for the Applicant, Alta Mesa Resources, Inc. ; John C. Moricoli, Jr., Attorney, appeared for Cimarron Production Company, Inc. ; Roger A. Grove, Attorney, appeared for EOG Resources, Inc. ; Ronald J. Frangione, Attorney, appeared for Chaparral Energy, Inc. ; Robert D. Gray, Attorney, appeared for Kirkpatrick Oil & Gas Company ; and Jeffrey P. Southwick, Attorney, appeared pro se. Michael L. Decker, Deputy General Counsel for Conservation, filed a Notice of Appearance. The Administrative Law Judge heard the Cause and filed her report with the Commission, which report has been considered and the Commission therefore finds as follows : FINDING S 1. That this is the Application of Alta Mesa Resources, Inc., for an Order amending and supplementing Order No. 119269, and the Plan of Unitization, approved and implemented thereby, which Order and Plan created the Lincoln North Unit, having for its purpose the unitized management, operation and further development of the Big Lime, Oswego Lime and Mississippi Lime common sources of supply underlying all of Sections 27, 28, 29, 30, 31, 32 and 33 and the W/2 of Section 34, Township 18 North, Range 5 West ; and the E/2 NE/4 and the S/2 of Section 25, the SE/4 of Section 26, and all of Sections 34, 35 and 36, Township 18 North, Range 6 West; and Lots 3 and 4, and the S/2 NW/4 and the SW/4 of Section 3, and all of Sections 4, 5 and 6, Township 17 North, Range 5 West ; and all of Sections 1, 2, 3, 10 and 11, and the W/2 and the W/2 SE/4 of Section 12, and the W/2 NE/4 and the W/2 SE/4 and the W/2 of Section 13, and the N/2 and the SW/4 and the N/2 SE/4 of Section 14, and the F,/2 of Section 1 5, Township 17 North, Range 6 West, all in Kingfisher County, Oklahoma (the "Order and Plan"). 2. That the Commission has jurisdiction over the subject matter and of the persons interested herein. That notice has been given in all respects as required by law and the rules of the Commission. 3. The Order and Plan were entered and approved by the Commission on February 20, 1976, and have previously been amended by Order Nos. 150344, 168882, 186281 and 371358, which Orders amended and supplemented the Plan with reference to Unit operations, and applied and pertained only to the working interest owners within said Unit. 4. The evidence established that Order No. 371358, the last amendment to Order No. 119269, in addition to establishing certain provisions having to do with payment of overhead charges, gas balancing, gas marketing, and other provisions relating only to the working interest owners in the conduct of field-wide unit operations, also required approval of an Amended Plan of Unitization by the working interest owners which implemented such changes pursuant to paragraph 2 thereof, and also required the implementation of what was described as a pilot water flood operation pursuant to paragraph 3 thereof. 5. The evidence further established that within the time specified under Order No. 371358, the requis ite approval of the working interest owners to the -2-
Amended Plan of Unitization was obtained, and the within described pilot water flood operation was commenced, all within the time and manner as specified in said Order, and such conditions contained within Order No. 371358 have been satisfied. 6. The evidence further established that in furtherance of unit operations, so as to prevent waste, both physical and economic, and so as to maximize to the greatest extent possible the efficient recovery of oil and gas from the common sources of supply affected thereby, Order No. 119269, as amended and supplemented, and the Plan of Unitization approved thereby, should be further amended and supplemented by adding a provision specifically granting to the Operating Committee, defined and described therein, the authority to appoint, from time to time, in its sole discretion, a Special Unit Operator, exclusively for the express purpose of drilling and operating horizontal wells in the unitized interval within the Mississippi Lime, more particularly defined and described therein. Such amendment and supplement to the Order and Plan will both prevent waste and protect correlative rights, and will result in the more efficient recovery of unitized hydrocarbons in accordance with the intent of the Order and Plan, to the end that substantially more oil and gas reserves will be recovered from said unitized common source of supply than would otherwise be recovered to the benefit of all concerned. 7. The proposed amendment and supplement for which approval is sought in this proceeding affects only the working interest owners subject to the Order and Plan. Applicant has obtained the written approval of said amendment and supplement of more than 63% of all leasehold (working interest) owners within the Unit area. 8. The granting of the requested relief is for the common good and will result in the general advantage of the owners of the oil and gas rights within the specified unitized common source of supply; will prevent waste, both physical and economic ; will protect correlative rights, and will advance the intent and goal of the Lincoln North Unit in the maximum, efficient recove ry of hydrocarbon substances. ORDE R IT IS THEREFORE ORDERED by the Corporation Commission of Oklahoma as follows : 1. That Order No. 119269, and the Plan of Unitization approved and implemented thereby, which Order and Plan created the Lincoln North Unit, having for its purpose the unitized management, operation and further development of the Big Lime, Oswego Lime and Mississippi Lime common sources of supply underlying all of Sections 27, 28, 29, 30, 31, 32 and 33 and the W/2 of Section 34, Township 18 North, Range 5 West; and the E/2 NE/4 and the S/2 of Section 25, the SE/4 of Section 26, and all of Sections 34, 35 and 36, Township 18 North, Range 6 West; and Lots 3 and 4, and the S/2 NW/4 and the SW/4 of Section 3, and all of Sections 4, 5 and 6, Township 17 North, Range 5 West ; and all of Sections 1, 2, 3, 10 and 11, and the W/2 and the W/2 SE/4 of Section 12, and th e -3-
W/2 NE/4 and the W/2 SE/4 and the W/2 of Section 1 3, and the N/2 and the SW/4 and the N/2 SE/4 of Section 14, and the E/2 of Section 15, Township 17 North, Range 6 West, all in Kingfisher County, Oklahoma, shall be, and the same hereby are amended and supplemented, and the following amendment shall be made a part of the Plan of Unitization of the Lincoln North Unit, Kingfisher County, Oklahoma, in accordance with Article 27.1 of said Plan and the applicable Oklahoma Statutes : The Unit Operating Committee shall have authority to appoint Cimarron Production Company, a "Special Unit Operator", exclusively for the express purpose of drilling and operating horizontal wells in the Mississippi formation, subject to the provisions of "Operator" in Article 12, and all other provisions of the Plan of Unitization, notwithstanding Article 13.1. Such operations are not to interfere with on-going Unit Operations being carried out by the Unit Operator. The Special Unit Operator is to account for expenses and revenue independently of on-going Unit Operations. 2. That within the time specified under Order No. 371358, the requisite approval of the working interest owners to the Amended Plan of Unitization was obtained and the therein described pilot water flood operation was commenced, all in accordance with paragraphs 2 and 3 of said Order. That such conditions specified in said Order No. 371358 have been satisfied. DONE AND PERFORMED this to day of April, 2001. OF OKLAHOMA Bob Anthony, Chairman -Chairman AT., V Ed Apple, Cor". Peggy M 1, Secret ary of the Commission -4-
REPORT OF THE ADMINISTRATIVE LAW JUDG E The foregoing Findings and Order are the report and recommendations of the Administrative Law Judge. &&2~ xd~ Connie K. Moore, Administrative Law Judge,~ 9 (/,~~a~ Date Reviewe r Date ep\r i\o5174-5-