This form is used when the parties own undivided leasehold interests in the Lease as to depths from the surface of the ground to a Specific Depth. The parties acknowledge that the production from a well on the leasehold interest will be obtained from depths in which the ownership is not common. Thus, the parties find it necessary to enter into this Agreement to enable the parties to each be paid a proportionate part of the commingled production from the separate depths in which they own interests.
A South Carolina Commingling Agreement Among Working Owners As to Production from Different Formations Out of the Same Well Bore, Where Leasehold Ownership Varies As to Depth is a legally binding agreement entered into by multiple working owners who have varying leasehold ownership depths in a well bore located in South Carolina. This agreement allows for the simultaneous production of oil, gas, or other hydrocarbons from different formations within the same well bore, despite the differences in leasehold ownership depths. The purpose of this agreement is to provide a framework for the fair and equitable sharing of production revenues and costs among the working owners involved. By allowing the commingling of production from different formations, the agreement maximizes the overall production potential of the well and reduces operational inefficiencies and costs associated with drilling and maintaining separate well bores for each formation. Key provisions of a South Carolina Commingling Agreement Among Working Owners As to Production from Different Formations Out of the Same Well Bore, Where Leasehold Ownership Varies As to Depth may include: 1. Definitions: This section defines key terms such as "working interest owner," "formation," "leasehold ownership depth," and other relevant terms to ensure clarity and consistency throughout the agreement. 2. Purpose and Scope: Outlines the purpose and intent of the agreement, including the objective of efficiently producing hydrocarbons from multiple formations within the same well bore while addressing the varying leasehold depths. 3. Authorization for Commingling: Specifies the authority granted by the working owners to commingle production from different formations, subject to the limitations and conditions defined in the agreement. This may include necessary permits, regulatory compliance, and operational requirements. 4. Allocation of Production: Describes the method for determining the allocation of the commingled production among the working owners based on their respective leasehold ownership depths. This may include a formula or ratio based on the percentage of ownership in each formation. 5. Accounting and Reporting: Establishes the procedures for accurate and transparent accounting of production volumes, sales revenues, and associated costs. It may require periodic reporting, audits, and the appointment of a designated accounting party responsible for managing the financial aspects of the agreement. 6. Liability and Indemnification: Includes provisions to address liability arising from the commingled production, such as well damage, environmental liabilities, or third-party claims. It may also outline the obligations of each working owner to indemnify and hold harmless the others in case of any legal disputes or damages. It is important to note that the exact terms and provisions of a South Carolina Commingling Agreement Among Working Owners As to Production from Different Formations Out of the Same Well Bore, Where Leasehold Ownership Varies As to Depth may vary based on the specific circumstances and preferences of the parties involved. Different versions or types of this agreement may exist, tailored to meet the unique complexities and characteristics of a particular well or project.
