Effective upon signature of the Governor, the Louisiana Legislature will have amended the Risk Fee Statute, La. Rev. Stat. Ann. § 30:10, which governs unit operations in the absence of a joint operating agreement. The amendment is contained in Senate Bill No. 388, and would make the changes summarized below.
- Notices Allowed After Spudding
Under prior law, any owner drilling or intending to drill a well serving the unit was required to notify all other owners in the unit “prior to the actual spudding of any such well of the drilling or the intent to drill and give each owner an opportunity to elect to participate in the risk and expense of such well.”
The amendment strikes the language underlined above and adds language referencing wells already drilled, resulting in the following:
“Any owner drilling, intending to drill, or who has drilled a unit well, a substitute unit well, an alternate unit well, or a cross-unit well on any drilling unit heretofore or hereafter created by the commissioner, may, by registered mail, return receipt requested, or other form of guaranteed delivery and notification method, not including electronic communication or mail, notify all other owners in the unit of the drilling or the intent to drill and give each owner an opportunity to elect to participate in the risk and expense of such well.”
- Estimated or Actual Drilling Costs Due Within Sixty Days of Spudding or Receipt of the Notice, Whichever is Later
Because prior law required notice prior to spudding, the due date for payment of drilling costs determined by the AFE sent with the notice was within sixty (60) days of spudding.
The amendment provides that estimated or actual drilling costs determined by the AFE sent with the notice are due within sixty (60) days of the actual spudding of the well or receipt by the notified owner of the notice, whichever is later.
- No Sixty Day Limit for Risk Fee Notices When a Unit is Formed Around a Well Drilled or Drilling or When a Unit is Revised
Prior law required risk fee notices to be sent within sixty (60) days of the date of the unit order: (1) to nonparticipating owners in a unit created around a well already drilled or drilling; or (2) to owners of additional tracts included in a revised unit. The amendment eliminates the sixty (60) day requirement.
- Expressly Provides That Failure to Send Notices to All Owners Does Not Invalidate Remaining Notices
The risk fee statute, as amended, states that an owner drilling, intending to drill, or who has drilled a well serving the unit may notify “all other owners in the unit” of the drilling or intent to drill and give each owner an opportunity to elect to participate in the risk and expense of such well.
Prior law did not expressly address the effect of properly sending notices to less than all owners. The amendment includes a statement that notices properly made to any owner are valid even if not all of the owners in the unit are properly notified.
For more information, contact Jeff Lieberman (firstname.lastname@example.org).
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