312 IAC 29-19-6 - Recovery of additional costs from carried working interest owners

Authority: IC 14-10-2-4; IC 14-37-3

Affected: IC 14-37

Sec. 6.

(a) This section establishes provisions allowing for the recovery of additional costs incurred by the operator from carried working interest owners that are in addition to the recovery of actual expenses specified under section 5(a)(2)(B) of this rule.

(b) A well or unit operator is entitled to receive the first production from a well or unit that would otherwise be credited to the carried working interest owner so that the carried working interest owner's proportionate share of actual expenditures incurred by the operator under this section are paid to the operator from the production.

(c) An operator shall be entitled to recover an additional amount of between one hundred percent (100%) and three hundred percent (300%) of the cost of drilling, testing, completing, and plugging the well as consideration for the additional financial burden taken by the operator in the event the well would have been drilled as a dry hole. The amount of additional costs allowable under this subsection shall be based upon the distance from the well to other productive wells in the same formation and other factors increasing the risk that the well might be a dry hole.

Notes

312 IAC 29-19-6

Natural Resources Commission; 312 IAC 29-19-6; filed 12/1/2017, 10:35 a.m.: 20171227-IR-312160230FRA Readopted filed 1/17/2023, 1:53 p.m.: 20230215-IR-312220328RFA