[Because of its length, the order is set forth following the Findings of Fact.]
FINDINGS FO FACT
1. As previously determined and set forth in the order entered herein on April 10, 1992 and as otherwise appears in these proceedings, the commission [natural resources commission) and its designees have jurisdiction of the subject matter of the petitions and all proceedings relating thereto pursuant to IC 13-8-11, IC 4-21.5 and 310 IAC 0.6-1 and related statutes and regulations.
2. The Commission and its designees have jurisdiction of the respective named parties and other affected persons in interest pursuant to such statutes and regulations and further pursuant to the following specific grounds:
a. Of Citizens [Citizens Gas and Coke Utility] by reason of the filing of its petitions herein and its further participation in these proceedings;
b. Of the Chestnut Group (Ruth Jane Chestnut and other remonstrants] and the individual members thereof by reason of their appearance herein by counsel and their further participation in these proceedings;
c. of the Consenting Parties by reason of notice duly given in accordance with applicable laws and regulations and their respective written ratifications filed herein as a part of Citizens pre-filed testimony and exhibits; and of Max Squire for the additional reason of his appearance and objection filed herein.
d. Of the Defaulting Parties by reason of notice duly given in accordance with applicable laws and regulations. Accordingly, the Commission and its designees have jurisdiction of all persons who are necessary or proper parties to these proceedings.
3. Petitioner [Citizens] is now and has been continuously since the drilling of its discovery well, the Rollison No. 1 well in 1969, the sole operator of the oil and gas operations conducted with respect to the Salem Limestone Formation (the "Salem Pool") and the Devonian Limestone Formation (the "Devonian Pool") (as well as other undeveloped strata) underlying certain lands in Section 4, 5, 6, 7, 8 and 9 in Township 6 North, Range 5 West, in Greene County, State of Indiana.
4. Petitioner has proposed the integration of the interests of the respective owners of oil and gas interests in and to the said Salem Pool and Devonian Pool pursuant to the terms and provisions of the Salem Unit Agreement and the Salem Operating Agreement, as to the Salem Pool, and the terms and provisions of the Devonian Unit Agreement and the Devonian Operating Agreement, as to the Devonian Pool, copies of each of which agreements are attached to this Order and by reference incorporated herein and made a party hereof. [omitted.]
5. The Salem Unit, as defined in the applicable agreements, comprises and includes the following lands in Greene County, Indiana, to-wit: [legal description omitted].
6. To the extent that any of the documents filed as a part of Citizens, pre-filed evidence herein, and specifically Exhibit S-4 therein, contains descriptions at variance with the foregoing, such documents and each of them shall be deemed amended to conform to the descriptions set forth herein.
7. The Devonian Unit, as defined in the applicable agreements, comprises and includes the following lands in Greene County, Indiana, to-wit: [legal description omitted].
8. The respective tracts included within the Devonian Unit to which individual participation factors are assigned are separately described as follows, and collectively form the Devonian Unit described above:
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[legal description omitted]. To the extent that any of the documents filed as a part of Citizens' pre-filed evidence herein, and specifically Exhibit D-4 therein, contains descriptions at variance with the foregoing, such documents and each of them shall be deemed amended to conform to the descriptions set forth herein.
9. The said Salem Pool and the said Devonian Pool each constitutes a pool suitable for secondary recovery, methods within the meaning of IC 13-8-11 as amended.
10. Each of the proposed Unit Agreements as amended by the respective amendments thereto noted below and where pertinent, each of said amendments, as well as the respective Unit Operating Agreements:
a. Includes separately owned tracts of land located within the respective pools (i.e. the Salem Limestone Formation and the Devonian Limestone Formation) underlying the lands described in the proposed Unit Agreements, respectively, which are found to be suitable for secondary recovery methods;
b. Will result in the prevention of waste and avoid the drilling of unnecessary wells;
c. Is based upon reasonable terms that give the owner of each tract and all persons in interest with respect thereto an equitable share of the oil and natural gas in the respective pool affected thereby;
d. Has been approved, adopted by stipulation and/or executed by a preponderance of the persons in interest with respect to the affected pool;
e. Is fair, reasonable and equitable to all persons in interest in the respective pool to which the same pertains with respect to all affected matters, including, without limitation, participation in production by all parties and participation in costs of drilling, completion, operation, production and all other applicable costs by working interest owners and unleased parties and other parties now or hereafter required to share therein;
f. Is in accordance with each of the applicable provisions of all pertinent laws, rules and regulations affecting the subject matter; and g. Comprises and includes lands constituting a proper unit for the installation, implementation and operation of secondary and other supplemental recovery techniques and methods for the production of oil and gas from the respective pools designated therein and thereby.
h. Should be and is hereby approved and adopted by the Commission as a part of this integration Order entered herein and hereby made binding upon and to inure to the benefit of all persons in interest with respect to the respective Salem and Devonian Pools and the acreage affected thereby.
11. The respective participation factors allocated to the respective tracts in the Salem Unit, as set forth in Exhibit A to the Salem Unit Agreement, are fair, reasonable and based upon all available pertinent data and consideration, said factors being set forth herein for convenience of reference and expressly adopted hereby, as follows: [designations of tract participation omitted].
12. The respective participation factors allocated to the respective tracts in the Devonian Unit, as set forth in Exhibit A to the Devonian Unit Agreement, are fair, reasonable and based upon all available pertinent data and consideration, said factors being set forth herein for convenience of reference and expressly adopted hereby, as follows: [designations of tract participation omitted].
13. All material statements and allegations contained in each of the documents filed as a part of Petitioner's pre-filed case herein and the several exhibits thereto are true in substance and in fact except as specifically set forth otherwise in this Order.
14. The objection filed by Max Squire herein presents no material or substantial question for determination in these proceedings nor any basis for denial of the integration of interests as provided herein, such objection being properly a matter for resolution by the appropriate taxing authorities and being outside the scope of these proceedings ....
15. The Administrative Law Judge finds that, notwithstanding any rule or regulation to the contrary, all necessary exceptions should be granted so that the wells required to be drilled to implement the respective integrations shall be permitted as to location without regard to existing property lines within the unit area; and further finds that in the event the Unit Operator should elect to complete either of such wells in such a manner as not to cause this integration to become effective, such wells shall, before production is commenced therefrom, be re-permitted upon application of the Unit Operator, upon notice, and under such revised forced integration order or orders as the Commission shall find appropriate and lawful under the then prevailing circumstance or circumstances.
ORDER
In accordance with the foregoing, it is now ORDERED that, in accordance with final approval hereof by the Natural Resources Commission as
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evidenced by the signature of its secretary endorsed upon a counterpart hereof, that:
1. The respective Unit Agreements and Unit Operating Agreements for the Salem Unit and for the Devonian Unit shall each be, and are hereby, revised, modified and amended in accordance with and so as to conform to the findings contained in this order and in particular, without limitation:
a. Exhibit A to each of said Agreements is amended to incorporate the respective Unit Descriptions, Tract Descriptions and Tract Participation Factors set forth in the foregoing findings; and
b. Exhibit B to each of said Agreements is amended to conform to the revisions of Exhibit A [exhibits and revisions omitted]; all effective immediately upon final approval of this Order; and as so revised, modified and amended are ordered incorporated in each of said Agreements, respectively, in lieu of and in all things superseding the original exhibits so designated and attached to the said Agreements.
2. The interests of all owners of oil and gas rights in and to the respective Salem and Devonian pools identified and described in the applicable Unit Agreements and the oil and gas produced therefrom shall be, and are hereby, ordered integrated in accordance with the terms and provisions of the respective Unit Agreements as amended by the respective amendments set forth above [amendments omitted], which amendments are expressly incorporated in and made a part of said Unit Agreements respectively; and in accordance with all applicable laws, rules and regulations applicable thereto, effective as set forth therein and in and by said amendments.
3. In accordance with the provisions of the Unit Agreements, form and after the respective effective dates as determined in accordance with the Unit Agreements, the respective parties in interest in and to the separately owned tracts included in each Unit Area, respectively, shall participate in the production from any wells drilled on such respective Unit Areas and producing oil, gas or other hydrocarbons from each pool, as affected by the applicable Unit Agreement, and in all costs of drilling, completing, operating and producing the same, in accordance with the terms and provisions of the applicable Unit Agreement and, as among the parties required to share in the costs thereof or chargeable with a portion of such costs under applicable provisions of law, in accordance with the terms of the respective separate Unit Operating Agreements, the said Unit Agreements and Unit Operating Agreements being hereby approved and incorporated herein by reference as a part of this Order.
4. Citizens Gas & Coke Utility is hereby designated as the Operator of each such Unit Area, to develop and operate the same and to have and exercise such rights and powers and to be subject to such obligations as are more fully set forth in the respective Unit Agreements and IC 13-8-11-3, and in further accordance with each of the respective separate Unit Operating Agreements among the affected working interest owners and other parties required to share in applicable costs.
5. Nothing in this order shall be deemed to authorize any charges to be made to nor any production withheld from any mineral owner or surface owner who, by reason of the execution of any other separate contract or agreement, is not liable for the payment of costs.
6. Notwithstanding any rule to the contrary, the wells required to be drilled to implement the respective unitizations shall be permitted as to location without regard to existing property lines within the unit area; and in the event the Unit Operator should elect to complete either of such wells in such a manner as to not cause that unitization to become effective, such wells shall, before production is commenced therefrom, be re-permitted upon application of the Unit Operator, upon notice, and under such revised forced integration order or orders as the Commission shall find appropriate and lawful under the then prevailing circumstance or circumstances.
7. This order shall be effective and binding upon all affected parties immediately upon the final approval hereof by the Natural Resources Commission as evidenced by the signature of its secretary to one or more counterparts hereof. [Signatures were executed but are omitted from CADDNAR.]