Good News for West Virginia’s Oil and Gas Producers
April 11, 2022
The 2022 legislative session resulted in the passage of two bills of significance to oil and gas operators. First, Senate Bill 650 was passed (effective June 30, 2022). With this bill, the 2018 Co-Tenancy Modernization and Majority Protection Act is modified to eliminate the requirement that there be seven or more cotenants in order to utilize the provisions of the Act. Thus, the Act is now applicable to all mineral tracts in the state so long as royalty owners vested with at least 75% of the right to develop the minerals consent to the development of the oil and gas.
More importantly, West Virginia passed Senate Bill 694, a forced pooling bill (effective June 7, 2022). To obtain a horizontal unit order from the West Virginia Oil and Gas Conservation Commission, a producer must make several showings. First, the producer must obtain the consent of mineral owners of 75% or more of the net acreage in the target formation to be included in the horizontal well unit. Second, the producer must control, by ownership, lease or otherwise, 55% or more of the net acreage in the target formation proposed to be included in the horizontal well unit. Finally, the producer must have made good faith offers to all known and locatable royalty owners and operators who have not previously agreed to participate or consented or agreed to development. With respect to non-consenting mineral owners, the statute sets forth the methods for determining the amount to be received by a party under lease and one not under lease. The statute also addresses treatment of consenting and non-consenting operators included within a proposed unit.
For more information, please contact Beth Elmore at (304) 340-1258.