A. Sections 87.6 through 87.9 of this title shall be known and may be cited as the "Extended Horizontal Well Development Act".

B. As used in the Extended Horizontal Well Development Act:

1. "Adjacent common source of supply" means a common source of supply which is immediately adjacent to and adjoining the targeted reservoir or targeted reservoirs in a multiunit horizontal well being drilled pursuant to Section 87.8 of this title or a well being drilled in a horizontal well unitization pursuant to Section 87.9 of this title and which is inadvertently encountered in the drilling of the lateral of a multiunit horizontal well or a well pursuant to a horizontal well unitization when such well is drilled out of or exits, whether on one or multiple occasions, the targeted reservoir or targeted reservoirs, and which is not the primary target of the subject well and shall not be included in the relinquished rights pursuant to subsection (h) of Section 87.1 of this title. In the event that an adjacent common source of supply may be inadvertently encountered in the drilling of the lateral of a multiunit horizontal well or a well pursuant to a horizontal well unitization when such well is drilled out of or exits, whether on one or multiple occasions, the targeted reservoir or targeted reservoirs, then said inadvertently entered adjacent common source of supply shall be included as part of the targeted reservoir only for the purpose of the inadvertent penetrations, and any subsequent completion, commingling and production of said adjacent common source of supply with the targeted reservoir or targeted reservoirs, but not for future development of said adjacent common source of supply;

2. "Allocation factor" means the percentage of costs, production or proceeds allocated to a unit affected by a multiunit horizontal well;

3. "Application" means a written request filed by an owner of the right to drill seeking approval to drill, complete and produce a multiunit horizontal well or to create a horizontal well unitization;

4. "Commission" means the Corporation Commission;

5. "Completion interval" means, for an open hole completion in a horizontal well, the interval from the point of entry to the terminus and, for a cased and cemented completion in a horizontal well, the interval from the first perforations to the last perforations;

6. "Horizontal well" means a well drilled, completed, or recompleted with one or more laterals which, for at least one lateral, the horizontal component of the completion interval exceeds the vertical component of the completion interval and the horizontal component extends a minimum of one hundred fifty (150) feet in the formation;

7. "Horizontal well unitization" means a unitization for a targeted reservoir created pursuant to Section 87.9 of this title;

8. "Horizontal component" means the calculated horizontal distance from the point of entry to the terminus;

9. "Lateral" means the portion of the wellbore of a horizontal well from the point of entry to the terminus;

10. "Multiunit horizontal well" means a horizontal well in a targeted reservoir or targeted reservoirs wherein the completion interval of the well is located in more than one unit formed for the same targeted reservoir, with the well being completed in and producing from such targeted reservoir in two or more of such units;

11. "Plan of development" means the proposed plan for developing the targeted reservoir unitized pursuant to Section 87.9 of this title, which plan, based upon the information and knowledge then available to the applicant, shall include:

a.a map or maps indicating the location of each existing well in the proposed unit and the anticipated location of each horizontal well proposed to be drilled in the proposed unit that is anticipated to be necessary, based upon the information and knowledge then available to the applicant, for the full and efficient development and operation of the proposed unit for the recovery of oil and gas from the targeted reservoir within the proposed unit,

b.any applicable proposed allocation factor or factors for allocating the costs, production and proceeds from the proposed unit,

c.the anticipated timing and anticipated sequence of drilling of each horizontal well in the proposed unit, and

d.any other specific terms, provisions, conditions and requirements set forth in Section 87.9 of this title or determined by the Commission to be reasonably necessary or proper to effectuate or accomplish the purpose of Section 87.9 of this title;

12. "Point of entry" means the point at which the borehole of a horizontal well first intersects the top of the targeted reservoir;

13. "PRSA" means the Production Revenue Standards Act;

14. "Targeted reservoir" means one or more common sources of supply which will be encountered by the horizontal lateral portion of a horizontal well, and which has been designated by the Commission as part of an order, rule or emergency rule as potentially suited for development for the applied for multiunit horizontal well pursuant to Section 87.8 of this title or a horizontal well unitization pursuant to Section 87.9 of this title. Provided, however, that more than one common source of supply may only be granted by the Commission and included in the targeted reservoir upon a showing of reasonable cause by the applicant requesting the multiunit well in the application requesting authority for the multiunit well prior to the drilling of said multiunit well that the inclusion of the additional common source(s) of supply shall prevent waste and protect the correlative rights of all of the owners of the oil and gas rights;

15. "Terminus" means the end point of the borehole of a horizontal well in the targeted reservoir;

16. "Wellbore royalty interest" means, for each separate multiunit horizontal well, the sum of resulting products of each affected unit's royalty share for that unit, as defined by the PRSA, multiplied by that unit's allocation factor for production and proceeds;

17. "Wellbore royalty proceeds" means the proceeds or other revenue derived from or attributable to any production of oil and gas from the multiunit horizontal well multiplied by the wellbore royalty interest;

18. "Unit" means a drilling and spacing unit for a single common source of supply created pursuant to Section 87.1 of this title or a horizontal well unitization created pursuant to Section 87.9 of this title;

19. "Unit's royalty contribution factor" means the royalty share for an affected unit, as defined by PRSA, multiplied by that unit's allocation factor, then divided by the total wellbore royalty interest; and

20. "Vertical component" means the calculated vertical distance from the point of entry to the terminus.

Added by Laws 2011, c. 54, § 2, emerg. eff. April 13, 2011. Amended by Laws 2012, c. 264, § 1, emerg. eff. May 16, 2012; Laws 2014, c. 400, § 1, emerg. eff. June 3, 2014; Laws 2017, c. 372, § 3.