Okla. Stat. tit. 52, § 52-87.6

Definitions.

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

Oklahoma Statutes - Title 52. Oil and Gas Page 69

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
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

Oklahoma Statutes - Title 52. Oil and Gas Page 70

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.