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55-1306. Unit operations. All operations, including, but not limited to, the commencement, drilling, or operation of a well upon any part of the unit area shall be deemed for all purposes the conduct of such operations upon each separately owned tract in the unit area by the several owners thereof. The portion of the unit production allocated to a separately owned tract in a unit area shall, when produced, be deemed, for all purposes, to have been actually produced from such tract by a well drilled thereon. Operations conducted pursuant to an order of the commission providing for unit operations shall constitute a fulfillment of all the express or implied obligations of each lease or contract covering lands in the unit area to the extent that compliance with such obligations cannot be had because of the order of the commission.

The portion of the unit production allocated to any tract, and the proceeds from the sale thereof, shall be the property and income of the several persons to whom, or to whose credit, the same are allocated or payable under the order providing for unit operations.

No division order or other contract relating to the sale or purchase of production from a separately owned tract shall be terminated by the order providing for unit operations, but shall remain in force and apply to oil and gas allocated to such tract until terminated in accordance with the provisions of such division order or contract.

Except to the extent that the parties affected so agree no order providing for unit operations shall be construed to result in a transfer of all or any part of the title of any person to the oil and gas rights in any tract in the unit area. All property, whether real or personal, that may be acquired in the conduct of unit operations hereunder shall be acquired for the account of the working interest owners within the unit area, and shall be the property of such owners in the proportion that the expenses of unit operations are charged.

The obligation or liability of each working interest owner, both nonoperator and operator, in the several separately owned tracts in the unit for the payment of unit expense at all times shall be several and not joint or collective, and a working interest owner of the oil or gas rights in the separately owned tract shall not be chargeable with, obligated or liable, directly or indirectly, for more than the amount apportioned, assessed or otherwise charged to his or her interest in the separately owned tract pursuant to the order of unitization.

History: L. 1967, ch. 299, ยง 6; July 1.

Law Review and Bar Journal References:

"Survey of Kansas Law: Oil and Gas," 29 K.L.R. 545, 553 (1981).

"Structuring Routine Oil and Gas Transactions to Minimize Environmental Liability," David E. Pierce, 33 W.L.J. 76, 182 (1993).

CASE ANNOTATIONS

1. "Unit operation" defined and discussed in action upon application for termination of unit. Parkin v. Kansas Corporation Comm'n, 234 K. 994, 1009, 677 P.2d 991 (1984).

2. Defeasible term mineral interest divided between unitized and excluded operations; nonproduction on excluded portion terminated interest thereon. Edmonston v. Home State Oil & Gas Corp., 629 F.Supp. 620, 621 (1986).

3. Cited; extension of term mineral interest covering several tracts where one tract unitized determined and certified (60-3201 et seq.). Edmonston v. Home Stake Oil & Gas Corp., 243 K. 376, 381, 762 P.2d 176 (1988).


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