COLORADO
OIL AND GAS CONSERVATION COMMISSION
1120 Lincoln Street, #801
Denver, CO 80203
APPLICATION FOR INVOLUNTARY POOLING
(COLORADO REVISED STATUTES
34-60-116
APPLICANTS:
Richard
Watson and Theresa Watson
26818
Highway 160
Durango,
CO 81303
By
R.
Nicholas Palmer
P.O.
Box 2167
Durango,
CO 81302
970
385-9000
Attorney
for Applicants
OPERATORS:
EnerVest
San Juan Operating, LLC
3473
Main Avenue, #23
Durango,
CO 81301
Texaco
Exploration & Production Co., Inc.
4601
DTC Boulevard
Denver,
CO 80237
Property Involved
Township 34 North, Range 9 West, Section
9: E/2
Parcel No. 1 of Loma Vista Homes, La
Plata County, Colorado according to the amended Plat thereof filed for record
under Reception No. 386853 on August 27, 1974.
26818 Highway 160
Durango, Colorado 81303
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I.
FACTS:
1.
Applicants, Richard and Theresa Watson, are the owners of mineral
interests underlying four acres more or less of real property in La Plata
County, Colorado which has been included since 1992 in the acreage for a
drilling unit and oil and gas well called University 9-1 which was operated by
EnerVest San Juan Operating, LLC (“EnerVest”) through at least October of 2000
and has been operated since that time by Texaco and then Chevron. The latter completed an additional well for
this drilling unit in 2002 called the University 9-2.
Applicants believe there are other owners
of mineral interests within the drilling unit whose addresses are unknown to
them except for the adjoining property owners, John Clancy and Judy Campbell,
26822 Highway 160, Durango, CO 81301.
2.
In the past Applicants have been offered operating agreements and
mineral lease agreements for the subject mineral interests and have not entered
into any such agreements for the University 9-1. No agreement has been offered to Applicants
for the University 9-2.
3.
Applicants have been told by EnerVest that it would make no payments to
Applicants on account of their mineral interests because: (a) an owner is not
entitled to revenues from the well until the acreage involved is pooled, (b)
EnerVest did not have to pool the mineral interests acreage, this was the
responsibility of the mineral interest owners (c) the mineral interest owners
would not be entitled to any part of the revenues for the period prior to such
pooling because all of the revenue prior to a pooling order belonged to the
operators.
4.
Applicants believe that there is currently in excess of $20,000
possessed and taken by EnerVest on account of Applicants mineral interests in
the University 9-1 well from the period commencing with the first production
through December 31, 2000. No part of
this amount has been paid to Applicant by EnerVest who has taken and converted
it to its own use and exercised full ownership over said sums on the ground
this money belongs solely to it will not be paid to Applicants even after
involuntary pooling has been ordered by this Commission.
5.
At no time since 1992 has any operator of the University 9-1 well and
EnerVest applied to this Commission for involuntary pooling or offered any
voluntary pooling agreement to Applicants.
II.
RELIEF REQUESTED
Applicants request an Order of the
Commission against EnerVest as follows:
6. that the acreage and mineral interests
which have been included in drilling unit for University 9-1 since 1993 be
pooled;
7. that the pooling be effective as of
the 1993 date the well was completed;
8. that Applicants be paid the money
attributable to their mineral interests from the time of the completion of the
University 9-1 in 1993 to the present.
9. that the pooling order contain a list
of all of the mineral interests of each owner in the pooled unit and their
percentage interest in the 100% of the total mineral interests in the pool.
III.
LEGAL AND FACTUAL GROUNDS FOR THE REQUESTED RELIEF
10.
EnerVest has failed to apply to this Commission to obtain a pooling
order for the acreage and mineral interests involved. Neither have any pooling agreements been
offered to mineral interest owners by Enervest which refuses to make any
payments to the owners of the mineral interests in the acreage designated for
the University 9-1 without a pooling order from this Commission.
11.
The pooling order and the Applicants proportionate 12% royalty and their
proportionate 8/8 interest after recoupment of all costs, including the 200%
nonconsenting owner items, should be effective as of the 1993 date of well
completion on the grounds: (a) it is required by law, (b) it would be both a
denial of due process and an unconstitutional taking of property for EnerVest
to gain ownership of royalty and production money accrued since the time of
production which rightfully belongs to the owners of the mineral interests.
12.
The law requires an effective date for the pooling as of the completion
of the well in 1993 because:
(a)
the unit being pooled has been defined since 1992 and was defined before
the University 9-1 well was drilled;
(b)
CRS 34-60-116(6) provides:
"Each such pooling order shall be
made after notice and hearing and shall be upon terms and conditions that are
just and reasonable, and that afford to the owner of each tract or interest
in the drilling unit the opportunity to recover or receive, without unnecessary
expense, his just and equitable share." (Emphasis added)
(c)
CRS 34-60-116(7)(c) provides:
"A nonconsenting owner of a tract in
a drilling unit which is not subject to any lease or other contract for the
development thereof for oil and gas shall be deemed to have a landowner's
proportionate royalty of twelve and one half percent until such time as the
consenting owners recover, only out of the nonconsenting owner's proportionate
seven-eighths share of production, the costs specified in paragraph (b) of this
subsection (7). After recovery of such costs, the nonconsenting owner shall
then own his proportionate eight-eighths share of the well, surface
facilities, and production and then be liable for further costs as if he had
originally agreed to drilling of the well. (Emphasis added)
13.
Giving an operator like EnerVest the ownership of all revenues up to the
date of a pooling order would manifestly deprive Applicant and other owners in
the pooled drilling unit of their "just and equitable share". There is no basis in justice or equity for
EnerVest to claim all revenues up to the time a pooling order is entered; there
is no basis in justice or equity for an operator to claim more than recoupment
of costs, including the 200% nonconsenting owner items, and whatever
proportionate share the operator may have in the working interests. The law unequivocally provides that owners
such as Applicant are deemed to have a 12 1/2% royalty from production until
recoupment of costs, including the 200% nonconsenting owner items, and that
they are then owners of their proportionate 8-8ths share of the well, surface
facilities and production.
14.
Giving an operator like EnerVest the ownership of all revenues up to the
date of a pooling order would constitute a denial of due process to Applicant
and an unconstitutional taking of his property.
15.
There is no basis in the law or regulations or in equity and it would be
bad public policy to reward a knowledgeable oil and gas operator who creates a
drilling unit and successfully drills a well and then deliberately refuses to
make application for involuntary pooling by awarding it the money rightfully
due to the owners of the mineral interests accruing prior to a pooling order
that had to be obtained by one of the mineral interest owners. Such an award would constitute a denial of
due process and an unconstitutional taking of property because there is no
basis in the law or regulations which would lead a reasonable mineral interest
owner to believe there was any risk to their share of production and their
royalties during the period prior to a pooling order. If pre pooling revenues accruing to the
account of mineral owners are to belong to or be forfeited to the operator the
law or the regulations should be amended to spell this out so in the future such
owners would be able to protect themselves by filing applications for
involuntary pooling prior to production going on line if the operator has not
already done so. It would be manifestly
unjust to apply such a rule in the pooling sought in this Application where
there has been no such notice.
Dated:
December 20, 2002
Respectfully submitted,
______________________
R. Nicholas Palmer
P.O. Box 2167
Durango,
CO 81302
970 385-9000
Attorney for Applicants
VERIFICATION
STATE OF COLORADO )
COUNTY OF LA PLATA) ss
Theresa Watson, under penalty of perjury, states that
she is an Applicant and has read the contents of the foregoing Application and
that the matters stated therein are true of her own knowledge.
______________________
Theresa Watson
SUBSCRIBED AND SWORN to before me this day of December, 2002 by Theresa Watson
______________________
Notary Public
My
commission Expires:
____________________
CERTIFICATE OF SERVICE
I hereby certify that the foregoing
Application was deposited in the U.S. mail, first class postage prepaid, on
December , 2002 at
Durango, Colorado addressed to:
Enervest
San Juan Operating LLC #23
3473
Main Avenue
Durango,
CO 81301
John
Clancy and Judy Campbell
26822
Highway 160
Durango,
CO 81301.
Texaco
Exploration & Production Co. ,Inc.
4601
DTC Boulevard
Denver,
CO 80203
R.
Nicholas Palmer