Okla. Stat. tit. 52, § 52-87.1

drilling units.

Whenever the production from any common source of supply of oil

or natural gas in this state can be obtained only under conditions

constituting waste or drainage not compensated by counterdrainage,

then any person having the right to drill into and produce from such

common source of supply may, except as otherwise authorized or in

this section provided, take therefrom only such proportion of the

oil or natural gas that may be produced therefrom without waste or

without such drainage as the productive capacity of the well or

wells of any such person considered with the acreage properly

assignable to each such well bears to the total productive

capacities of the wells in such common source of supply considered

with the acreage properly assignable to each well therein.

(a) To prevent or to assist in preventing the various types of

waste of oil or gas prohibited by statute, or any wastes, or to

protect or assist in protecting the correlative rights of interested

parties, the Corporation Commission, upon a proper application and

notice given as hereinafter provided, and after a hearing as

provided in the notice, shall have the power to establish well

spacing and drilling units of specified and approximately uniform

size and shape covering any common source of supply, or prospective

common source of supply, of oil or gas within the State of Oklahoma;

provided, that the Commission may authorize the drilling of an

additional well or wells on any spacing and drilling unit or units

or any portion or portions thereof or may establish, reestablish, or

reform well spacing and drilling units of different sizes and shapes

when the Commission determines that a common source of supply

contains predominantly oil underlying an area or areas and contains

predominantly gas underlying a different area or areas; provided

further that the units in the predominantly oil area or areas shall

be of approximately uniform size and shape, and the units in the

predominantly gas area or areas shall be of approximately uniform

size and shape, except that the units in the gas area or areas may

be of nonuniform size and shape when they adjoin the units in the

oil area or areas; provided further that the drilling pattern for

such nonuniform units need not be uniform, and provided further that

the Commission shall adjust the allowable production within the

common source of supply, or any part thereof, and take such other

action as may be necessary to protect the rights of interested

parties. Any order issued pursuant to the provisions hereof may be

entered after a hearing upon the petition of any person owning an

interest in the minerals in lands embraced within such common source

of supply, or the right to drill a well for oil or gas on the lands

embraced within such common source of supply, or on the petition of

the Conservation Officer of the State of Oklahoma. When such a

Oklahoma Statutes - Title 52. Oil and Gas Page 57

petition is filed with the Commission, the Commission shall give at

least fifteen (15) days' notice of the hearing to be held upon such

petition by one publication, at least fifteen (15) days prior to the

hearing, in some newspaper of general circulation published in

Oklahoma County, and by one publication, at least fifteen (15) days

prior to the date of the hearing, in some newspaper published in the

county, or in each county, if there be more than one, in which the

lands embraced within the application are situated. Except as to

the notice of hearing on such a petition, the procedural

requirements of Section 86.1 et seq. of this title shall govern all

proceedings and hearings provided for by this section.
een (15) days

prior to the date of the hearing, in some newspaper published in the

county, or in each county, if there be more than one, in which the

lands embraced within the application are situated. Except as to

the notice of hearing on such a petition, the procedural

requirements of Section 86.1 et seq. of this title shall govern all

proceedings and hearings provided for by this section.

(b) In case of a spacing unit of one hundred sixty (160) acres

or more, no oil and/or gas leasehold interest outside the spacing

unit involved may be held by production from the spacing unit more

than ninety (90) days beyond expiration of the primary term of the

lease.

(c) In establishing a well spacing or drilling unit for a

common source of supply thereunder, the acreage to be embraced

within each unit may include acreage from more than one governmental

section, but shall not exceed six hundred forty (640) acres for a

gas well plus ten percent (10%) tolerance, unless the unit is a

governmental section and the governmental section contains more than

six hundred forty (640) acres in which case the unit may comprise

the entire section. Provided, however, fractional sections along

the state boundary line and within the townships along the boundary

where the survey west of the Indian Meridian meets the survey east

of the Cimarron Meridian may be spaced with adjoining section unit,

and the shape thereof shall be determined by the Commission from the

evidence introduced at the hearing, and the following facts, among

other things, shall be material: (1) the lands embraced in the

actual or prospective common source of supply; (2) the plan of well

spacing then being employed or contemplated in the source of supply;

(3) the depth at which production from the common source of supply

has been or is expected to be found; (4) the nature and character of

the producing or prospective producing formation or formations; and

(5) any other available geological or scientific data pertaining to

the actual or prospective source of supply which may be of probative

value to the Commission in determining the proper spacing and well

drilling unit therefor, with due and relative allowance for the

correlative rights and obligations of the producers and royalty

owners interested therein.

The order establishing such spacing or drilling units shall set

forth: (1) the outside boundaries of the surface area included in

such order; (2) the size, form, and shape of the spacing or drilling

units so established; (3) the drilling pattern for the area, which

shall be uniform except as hereinbefore provided; and (4) the

location of the permitted well on each such spacing or drilling

Oklahoma Statutes - Title 52. Oil and Gas Page 58

unit. To such order shall be attached a plat upon which shall be

indicated the foregoing information. Subject to other provisions of

Section 86.1 et seq. of this title, the order establishing such

spacing or drilling units shall direct that no more than one well

shall thereafter be produced from the common source of supply on any

unit so established, and that the well permitted on that unit shall

be drilled at the location thereon as prescribed by the Commission,

with such exception as may be reasonably necessary where it is

shown, upon application, notice and hearing in conformity with the

procedural requirements of Section 86.1 et seq. of this title, and

the Commission finds that any such spacing unit is located on the

edge of a pool and adjacent to a producing unit, or for some other

reason that to require the drilling of a well at the prescribed

location on such spacing unit would be inequitable or unreasonable.

Whenever such an exception is granted, the Commission shall adjust

the allowable production for the spacing unit and take such other

action as may be necessary to protect the rights of interested

parties.

Except for horizontal spacing units allowed by subsection (f) of
that to require the drilling of a well at the prescribed

location on such spacing unit would be inequitable or unreasonable.

Whenever such an exception is granted, the Commission shall adjust

the allowable production for the spacing unit and take such other

action as may be necessary to protect the rights of interested

parties.

Except for horizontal spacing units allowed by subsection (f) of

this section, any well spacing or drilling unit for a common source

of supply thereunder which exceeds six hundred forty (640) acres for

a gas well plus ten percent (10%) tolerance or exceeds the total

amount of acreage contained in a governmental section, and is not in

production or in the process of drilling development on the

effective date of this act shall be de-spaced. However, fractional

sections along the state boundary line and within the townships

along the boundary where the survey west of the Indian Meridian

meets the survey east of the Cimarron Meridian may be spaced with

adjoining section unit, and the shape thereof shall be determined by

the Commission.

(d) The Commission shall have jurisdiction upon the filing of a

proper application therefor, and upon notice given as provided in

subsection (a) of this section, to decrease the size of the well

spacing units or to permit additional wells to be drilled within the

established units, or to increase the size or modify the shape of

the well spacing units, upon proper proof at such hearing that such

modification or extension of the order establishing drilling or

spacing units will prevent or assist in preventing the various types

of wastes prohibited by statute, or any of the wastes, or will

protect or assist in protecting the correlative rights of persons

interested in the common source of supply, or upon the filing of a

proper application therefor to enlarge the area covered by the

spacing order, if such proof discloses that the development or the

trend of development indicates that such common source of supply

underlies an area not covered by the spacing order and such proof

discloses that the applicant is an owner within the area or within a

drilling and spacing unit contiguous to the area covered by the

Oklahoma Statutes - Title 52. Oil and Gas Page 59

application. Except in the instance of reservoir dewatering as

described herein, the Commission shall not establish well spacing

units of more than forty (40) acres in size covering common sources

of supply of oil, the top of which lies less than four thousand

(4,000) feet below the surface as determined by the original or

discovery well in the common source of supply, and the Commission

shall not establish well spacing units of more than eighty (80)

acres in size covering common sources of supply of oil, the top of

which lies less than nine thousand nine hundred ninety (9,990) feet

and more than four thousand (4,000) feet below the surface as

determined by the original or discovery well in the common source of

supply. In the instance of reservoir dewatering to extract oil from

reservoirs having initial water saturations at or above fifty

percent (50%), the Commission may establish drilling and spacing

units not to exceed six hundred forty (640) acres in size.
990) feet

and more than four thousand (4,000) feet below the surface as

determined by the original or discovery well in the common source of

supply. In the instance of reservoir dewatering to extract oil from

reservoirs having initial water saturations at or above fifty

percent (50%), the Commission may establish drilling and spacing

units not to exceed six hundred forty (640) acres in size.

(e) The drilling of any well or wells into any common source of

supply for the purpose of producing oil or gas therefrom, after a

spacing order has been entered by the Commission covering such

common source of supply, at a location other than that fixed by the

order is hereby prohibited. The drilling of any well or wells into

a common source of supply, covered by a pending spacing application

at a location or within location tolerance areas other than that

approved by a special order of the Commission authorizing the

drilling of such well is hereby prohibited. The operation of any

well drilled in violation of any spacing order so entered is also

hereby prohibited. Notwithstanding any provision of this section to

the contrary, the Commission, in the exercise of its authority to

prevent waste and protect correlative rights, may issue a permit to

drill any well for which notice and hearing have occurred for a

special order or an order on the merits in any type case prior to

the issuance of any such order. Any such permit shall be subject to

and conform with the final provisions of any such order when

entered. A final order from the Commission shall be required prior

to drilling for any well that falls within one (1) mile of the

certified boundary of an underground storage facility. The

Commission may issue a permit to drill any well prior to the

issuance of any such order in cases where the underground storage

operator does not object. When two or more separately owned tracts

of land are embraced within an established spacing unit, or where

there are undivided interests separately owned, or both such

separately owned tracts and undivided interests embraced within such

established spacing unit, the owners thereof may validly pool their

interests and develop their lands as a unit. Where, however, such

owners have not agreed to pool their interests and where one such

separate owner has drilled or proposes to drill a well on the unit

to the common source of supply, the Commission, to avoid the

drilling of unnecessary wells, or to protect correlative rights,

Oklahoma Statutes - Title 52. Oil and Gas Page 60

shall, upon a proper application therefor and a hearing thereon,

require such owners to pool and develop their lands in the spacing

unit as a unit. The applicant shall give all the owners whose

addresses are known or could be known through the exercise of due

diligence at least fifteen (15) days' notice by mail, return receipt

requested. The applicant shall also give notice by one publication,

at least fifteen (15) days prior to the hearing, in some newspaper

of general circulation published in Oklahoma County, and by one

publication, at least fifteen (15) days prior to the date of the

hearing, in some newspaper published in the county, or in each

county, if there be more than one, in which the lands embraced

within the spacing unit are situated. The applicant shall file

proof of publication and an affidavit of mailing with the Commission

prior to the hearing. All orders requiring such pooling shall be

made after notice and hearing, and shall be upon such terms and

conditions as are just and reasonable and will afford to the owner

of such tract in the unit the opportunity to recover or receive

without unnecessary expense the owner's just and fair share of the

oil and gas. The portion of the production allocated to the owner

of each tract or interests included in a well spacing unit formed by

a pooling order shall, when produced, be considered as if produced
itions as are just and reasonable and will afford to the owner

of such tract in the unit the opportunity to recover or receive

without unnecessary expense the owner's just and fair share of the

oil and gas. The portion of the production allocated to the owner

of each tract or interests included in a well spacing unit formed by

a pooling order shall, when produced, be considered as if produced

by such owner from the separately owned tract or interest by a well

drilled thereon. Such pooling order of the Commission shall make

definite provisions for the payment of cost of the development and

operation, which shall be limited to the actual expenditures

required for such purpose not in excess of what are reasonable,

including a reasonable charge for supervision. In the event of any

dispute relative to such costs, the Commission shall determine the

proper costs after due notice to interested parties and a hearing

thereon. The operator of such unit, in addition to any other right

provided by the pooling order or orders of the Commission, shall

have a lien on the mineral leasehold estate or rights owned by the

other owners therein and upon their shares of the production from

such unit to the extent that costs incurred in the development and

operation upon the unit are a charge against such interest by order

of the Commission or by operation of law. Such liens shall be

separable as to each separate owner within such unit, and shall

remain liens until the owner or owners drilling or operating the

well have been paid the amount due under the terms of the pooling

order. The Commission is specifically authorized to provide that

the owner or owners drilling, or paying for the drilling, or for the

operation of a well for the benefit of all shall be entitled to

production from such well which would be received by the owner or

owners for whose benefit the well was drilled or operated, after

payment of royalty, until the owner or owners drilling or operating

the well have been paid the amount due under the terms of the

pooling order or order settling such dispute. No part of the

Oklahoma Statutes - Title 52. Oil and Gas Page 61

production or proceeds accruing to any owner of a separate interest

in such unit shall be applied toward payment of any cost properly

chargeable to any other interest in the unit.

For the purpose of this section, the owner or owners of oil and

gas rights in and under an unleased tract of land shall be regarded

as a lessee to the extent of a seven-eighths (7/8) interest in and

to the rights and a lessor to the extent of the remaining one-eighth

(1/8) interest therein, unless and until the owner or owners make an

election or are deemed to make an election not to participate under

a pooling order issued by the Commission, at which time each such

owner shall be considered a lessor, subject to the judicially

recognized implied covenant to market found to exist by the courts

of this state in oil and gas leases covering lands located in this

state, to the extent of the full royalty percentage elected under

the pooling order. Should the owners of separate tracts or

interests embraced within a spacing unit fail to agree upon a

pooling of their interests and the drilling of a well on the unit,

and should it be established by final, unappealable judgment of a

court of competent jurisdiction that the Commission is without

authority to require pooling as provided for herein, then, subject

to all other applicable provisions of this act, the owner of each

tract or interest embraced within a spacing unit may drill on his or

her separately owned tract, and the allowable production therefrom

shall be that portion of the allowable for the full spacing unit as

the area of such separately owned tract bears to the full spacing

unit.

In the event a producing well or wells are completed upon a unit

where there are, or may thereafter be, two or more separately owned
est embraced within a spacing unit may drill on his or

her separately owned tract, and the allowable production therefrom

shall be that portion of the allowable for the full spacing unit as

the area of such separately owned tract bears to the full spacing

unit.

In the event a producing well or wells are completed upon a unit

where there are, or may thereafter be, two or more separately owned

tracts, each royalty interest owner shall share in all production

from the well or wells drilled within the unit, or in the gas well

rental provided for in the lease covering such separately owned

tract or interest in lieu of the customary fixed royalty, to the

extent of such royalty interest owner's interest in the unit. Each

royalty interest owner's interest in the unit shall be defined as

the percentage of royalty owned in each separate tract by the

royalty owner, multiplied by the proportion that the acreage in each

separately owned tract or interest bears to the entire acreage of

the unit.

(f) Notwithstanding any provision of this title to the

contrary, the Corporation Commission shall have jurisdiction upon

the filing of a proper application therefor, and upon notice given

as provided in subsection (a) of this section, to establish spacing

rules for horizontally drilled oil or gas wells whereby horizontally

drilled oil or gas wells may have well spacing units established of

up to one thousand two hundred eighty (1,280) acres plus tolerances

and variances as allowed pursuant to subsection (c) of this section.

For purposes of this subsection a "horizontally drilled oil or gas

Oklahoma Statutes - Title 52. Oil and Gas Page 62

well" shall mean an oil or gas well drilled, completed or

recompleted in a manner in which the horizontal component of the

completion interval in the geological formation exceeds the vertical

component thereof and which horizontal component extends a minimum

of one hundred fifty (150) feet in the formation. The Corporation

Commission shall promulgate rules necessary for the proper

administration of this subsection. For the creation and

continuation of any horizontal spacing unit pursuant to this

subsection that exceeds six hundred forty (640) acres plus

tolerances and variances as allowed pursuant to subsection (c) of

this section:

(1) absent a showing of reasonable cause, the unit shall

include all lands within each governmental section to be included in

the horizontal spacing unit;

(2) the applicant or applicants requesting the Commission to

form the horizontal spacing unit must be the owner of an interest in

the oil, gas and other minerals in each of the governmental sections

to be included in the horizontal spacing unit;

(3) the applicant or applicants requesting the Commission to

form a horizontal spacing unit must include in the application the

basis for requesting a spacing unit size greater than six hundred

forty (640) acres plus tolerances and variances as allowed pursuant

to subsection (c) of this section. Absent a showing of reasonable

cause, the contemplated horizontal lateral length for the initial

unit well in the horizontal spacing unit shall be at least seven

thousand five hundred (7,500) feet. If the lateral length of the

initial horizontal well does not actually measure a minimum of seven

thousand five hundred (7,500) feet, the Commission shall require the

applicant to show cause as to why such spacing order should not be

modified, superseded or vacated under the circumstances; and

(4) absent a showing of reasonable cause, the drilling of a

multiunit horizontal well pursuant to Section 87.8 of this title

shall not be available as the initial unit well for a horizontal

spacing unit unless the contemplated completed portion of the

lateral for said well is to exceed ten thousand five hundred sixty

(10,560) feet.
modified, superseded or vacated under the circumstances; and

(4) absent a showing of reasonable cause, the drilling of a

multiunit horizontal well pursuant to Section 87.8 of this title

shall not be available as the initial unit well for a horizontal

spacing unit unless the contemplated completed portion of the

lateral for said well is to exceed ten thousand five hundred sixty

(10,560) feet.

(g) A horizontal spacing unit may be established for a common

source of supply for which there are already established

nonhorizontal drilling and spacing units. A horizontal spacing unit

formed under subsection (f) of this section may exist concurrently

with any previously formed nonhorizontal drilling and spacing unit,

or any portion thereof, such that each concurrently existing unit

may be separately developed with a well drilled into, completed in

and hydrocarbons produced from the same common source of supply in

each such concurrently existing unit, with production from each such

well to be governed by and allocated pursuant to the applicable

unit. Subject to all of the provisions of this section, a pooling

Oklahoma Statutes - Title 52. Oil and Gas Page 63

order for a horizontal spacing unit which overlies an existing,

producing nonhorizontal drilling and spacing unit, shall provide

that, if a working interest owner in such producing nonhorizontal

drilling and spacing unit does not agree to develop the horizontal

spacing unit, the owner shall relinquish its nonparticipating

working interest in the horizontal spacing unit while retaining all

other rights, including the right to concurrently develop the

producing nonhorizontal unit.

(h) Notwithstanding anything in this title or a pooling order

to the contrary, each party owning a right to participate in

development of a horizontal well described in this subsection with a

vested interest as to which there is production in the geographical

area of the spacing unit or spacing units for a proposed horizontal

well which is drilled after the effective date of this act pursuant

to a pooling order, whether the pooling order was issued before or

after the effective date of this act, shall be afforded separate

elections as set forth below, subject to the following, provided;

however, a geographic area in which there is no existing producing

unit as of the date of the filing of the application for the

governing pooling order and which is initially developed pursuant to

a multiunit horizontal well authorized under Section 87.8 of this

title, or a horizontal spacing unit which contains more than six

hundred forty (640) acres plus tolerances and variances as allowed

for pursuant to subsection (c) of this section shall not be

considered to contain existing production for purposes of this

subsection, unless the geographical area of any spacing unit covered

by the governing pooling order: is overlain by a horizontal spacing

unit greater than six hundred forty (640) acres plus tolerances and

variances as allowed for pursuant to subsection (c) of this section

which is not subject to said pooling order; has a multiunit well

drilled pursuant to Section 87.8 of this title which includes a

horizontal spacing unit which contains more than six hundred forty

(640) acres plus tolerances and variances as allowed for pursuant to

subsection (c) of this section which is subject to said pooling

order; or has a multiunit well drilled pursuant to Section 87.8 of

this title for a combination of units different than drilled by the

initial multiunit well pursuant to said pooling order:
es a

horizontal spacing unit which contains more than six hundred forty

(640) acres plus tolerances and variances as allowed for pursuant to

subsection (c) of this section which is subject to said pooling

order; or has a multiunit well drilled pursuant to Section 87.8 of

this title for a combination of units different than drilled by the

initial multiunit well pursuant to said pooling order:

(1) as to a multiunit horizontal well authorized under Section

87.8 of this title, each party owning a right to participate in

development of the proposed multiunit horizontal well with a vested

interest as to which there is existing production in the

geographical area of the spacing unit for the proposed multiunit

well shall be allowed, and as to the extent of their development

rights as to which there is existing production, an election as to

the targeted reservoir or targeted reservoirs covered by each

pooling order for such proposed multiunit horizontal well described

above, unless otherwise agreed to or waived in writing after the

Oklahoma Statutes - Title 52. Oil and Gas Page 64

effective date of this act. If said multiunit well is drilled in

accordance with the pooling order, the relinquished rights of an

owner who elects or is deemed to have elected not to participate

with all or any part of that owner's interest in the multiunit

horizontal well shall be limited to only the owner's

nonparticipating working interest in the common source or common

sources of supply within the targeted reservoir or targeted

reservoirs covered by said election which are actually horizontally

drilled and completed by said well. The owner shall retain all

other rights, including all rights in any existing wellbores in

which the owner has participated;

(2) as to a horizontal well authorized by the Commission for a

horizontal spacing unit created under subsection (f) of this

section, if the horizontal spacing unit contains more than six

hundred forty (640) acres plus tolerances and variances as allowed

for pursuant to subsection (c) of this section, or is comprised of

more than one governmental section, each party owning a right to

participate in development of the proposed horizontal well with a

vested interest as to which there is existing production in the

geographical area of the spacing unit for the proposed horizontal

well shall be allowed, and as to the extent of their development

rights as to which there is existing production, a separate election

as to each common source of supply or common sources of supply

covered by the pooling order for a proposed horizontal well

described above, unless otherwise agreed to or waived in writing

after the effective date of this act. If said horizontal well is

drilled in accordance with the pooling order, the relinquished

rights of an owner who elects or is deemed to have elected not to

participate with all or any part of that owner's interest in the

horizontal well shall be limited to only the owner's

nonparticipating working interest in the common source or common

sources of supply covered by said election which are actually

horizontally drilled and completed by said well. The owner shall

retain all other rights, including any rights in all existing

wellbores in which the owner has participated;

(3) as to any well which is subject to a pooling order which

was entered prior to the effective date of this act, in order to be

entitled to the rights and benefits of this subsection, the owner

must have been vested with the right to participate in the subject

well as of the effective date of this act;

(4) any relinquishment of rights under this subsection shall be

pursuant to the governing pooling order and at such fair value as

determined by the Commission; and
rior to the effective date of this act, in order to be

entitled to the rights and benefits of this subsection, the owner

must have been vested with the right to participate in the subject

well as of the effective date of this act;

(4) any relinquishment of rights under this subsection shall be

pursuant to the governing pooling order and at such fair value as

determined by the Commission; and

(5) the provisions of subsections (g) and (h) of this section

shall supplement each affected pooling order as to development of

the affected spacing unit by use of horizontal wells from and after

the effective date of this act.

Oklahoma Statutes - Title 52. Oil and Gas Page 65