This form is pursuant to The Act of February 25, 1920, as amended and supplemented, authorizes communitization or drilling agreements communitizing or pooling all or a portion of a Federal oil and gas lease, with other lands, whether or not owned by the United States, when separate tracts under the Federal lease cannot be independently developed and operated in conformity with an established well-spacing program for the field or area.
A Kansas Commoditization Agreement is a statutory provision that allows mineral owners in Kansas to pool their interests together and form a unified drilling unit. It promotes efficient and orderly development of oil and gas resources by creating a framework for cooperation and consolidating small, fragmented mineral interests. The agreement is typically initiated by an operator who seeks to explore and develop a specific area for oil and gas production. It requires the consent and participation of all affected mineral owners within the designated area. The primary purpose of the agreement is to maximize recovery, minimize waste, and prevent unnecessary duplication of wells. Under a Kansas Commoditization Agreement, the participating mineral owners contribute their interests to a common pool or unit. The unit is usually a legally established area that encompasses the lands of the participating owners. Once formed, the unit operates as a single entity, and all production and revenue generated within the unit are shared among the owners according to their proportionate interests. The agreement typically outlines the rights and responsibilities of the participating parties, including rules for the drilling and operation of wells, the sharing of costs and profits, and the duration and termination of the agreement. It establishes a cooperative framework where the operator is responsible for conducting drilling operations, while the remaining owners share in the costs and benefits. In addition to the general Kansas Commoditization Agreement, there are a few specialized agreements that cater to specific circumstances or purposes: 1. Temporary or Interim Agreements — These agreements are used for short-term or temporary pooling arrangements. They are commonly employed when an operator needs immediate access to a specific tract or leases for drilling before a permanent agreement is reached. 2. Consent-Based Agreements — These agreements are formed when all the participating parties voluntarily agree to the terms and conditions of the commoditization. It allows for the pooling of interests when all owners are amenable and supportive of the initiative. 3. Forced or Compulsory Pooling — This type of agreement arises when a minority or dissenting mineral owner refuses to participate in the commoditization voluntarily. Operators can petition the Kansas Corporation Commission (KCC) to force pool the reluctant owner's interest if certain criteria are met, such as the majority support from other owners and demonstration of the need for efficient and proper development of the resource. In conclusion, a Kansas Commoditization Agreement serves as a valuable tool for efficient oil and gas production in the state. It enables the pooling of mineral interests, allowing operators to access and develop resources that might otherwise remain unprofitable or undeveloped. Different types of commoditization agreements cater to varied scenarios, ensuring fairness, cooperation, and streamlined operations within the industry.
