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NADOA is pleased to announce the rescheduled 44th Annual Institute!
Institute will be held November 8-10, 2017 at Lost Pines Resort in Bastrop, TX. If you were previously registered to attend in September, you DO NOT need to register again for November. However, registration for the November Institute is open for new attendees. If you were not able to attend in September, please join us in November. Register online and pay tuition at www.nadoa.org Registration: Member $625.00 Non-Member $725.00 The hotel link is now available. Click on the link below or go to www.nadoa.org to register for your hotel room. All reservations for September were cancelled. You MUST reserve your room for the November dates. All hotel accommodations are the responsibility of the registrant. Hotel Reservations:
due to speakers who are not able to present in November. The new class schedule will be available on the NADOA website once presentations are finalized. We are now offering a 4-hour review of Part 3 of the CDOA exam on Wednesday taught by Judy Moreland. Judy will also be available during Institute to answer questions about Parts 1 and 2 of the test. “How to Study for the CDOA” will not be offered on Wednesday. Judy’s class will be instrumental in helping you pass Part 3 of the exam. If you registered for September and are unable to attend Institute in November, please contact Chris Tucker at administrator@nadoa.org for a refund. If possible, please transfer your registration to a co-worker. See you at Lost Pines in November! Your 2017 Institute Committee and 2017 NADOA Board The format will be a 4-person scramble Place: Lost Pines Resort Course Date: November 8, 2017 Time: 12:30 pm Shotgun Start Registration: Starting at 11:00 am in front of the club house Entry Fee: $85 per player for NADOA Members and $105 for non-members Clubs will be available for rental at the course for $70+tax (paid at club when you arrive) Register at: http://www.nadoa.org NADOA Golf Outing:
https://aws.passkey.com/go/ NADOA17AnnualInstitute Room rate for Institute attendees: $195/night plus taxes Hotel registration deadline: October 20, 2017
Classes will be held Wednesday, Thursday and Friday. Minor changes may be made to the class schedule
NADOA N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s G R O W T H T H R O U G H E D U C T I O N
Volume MMXVII • No 3
www.NADOA.org
Contents Feature
NADOA 2017 Officers President Sandi Rupprecht
Articles
In This Legislative Updates Oklahoma....................................................................................14 Wyoming......................................................................................14 Texas............................................................................................15 Shale Development Impacts on Texas............................................16 Drinking Water Unharmed by Drilling........................................17 Fixed-Rate Post-Production Deduction Upheld. ......................18 NPRI Owners Need Not Consent to Pool..................................18 Post-Production Expenses Allowable on Flat-Rate Leases. .......20 Stone Energy Bankruptcy: Lessons for the JOA.......................21 Texas Anti-Gas Lawsuit Barred by Statute of Limitations.................19 Colorado COGCC and Governor Respond to Fatal Explosion................20 Unclaimed California....................................................................................23 Indiana........................................................................................24 Maine...........................................................................................24 New Jersey....................................................................................25 North Dakota..............................................................................26 President’s Corner. ................................................................1 NADOA Tech update.............................................................2 NADOA 2016 Audit and Profit & Loss.................................3 Institute Thank You Notes.....................................................4 Certification..........................................................................8 Counterpart Connection........................................................9 New Members......................................................................13 2017 Institute Committee....................................................28 2017 NADOA Board/Committee Chairs..............................29 Calendar of Events. .............................................................30 Legal Updates West Virginia Issue
1st Vice President Cheryl Hampton 2nd Vice Presiden t Jason Lucas Treasurer Michele Lawton
Corresponding Secretary Luanne Johnson, CDOA Recording Secretary Stephanie Moore, CDOA
The NADOA News Magazine is a quarterly publication of the National Association of Division
Order Analysts PO Box 44009 Denver CO 80201
Subscription: By membership to NADOA, at $75.00 per year.
News Magazine Editor Rona L. Erickson, CDOA Kaiser-Francis Oil Company Ronae@KFOC.net 918.491.4319 Associate Editor Cheryl Hampton champton@limerockresources.com
All rights reserved. No part of this publication may be reproduced/copied without written permission. Editorial disclaimer: The contents of this newsletter are intended for member use only and any other use without permission from the NADOA Board of Directors is strictly prohibited.Articles published herein represent the view of the authors; publication neither implies approval of the opinions expressed nor accuracy of the facts stated and NADOA accepts no liability for misprints.
President’s
Corner
Sandi Rupprecht 2017 NADOA President
Our thoughts and prayers are still with those of you who have suffered hardship from the wind and flooding caused by the hurricane. Please let us know if you have needs that our membership might be able to help you with.
My mentor and former boss, Vicky Dolven, shared an article with our former company, Barrett Resources, many years ago that I believe is still relevant and appropriate today. I am sharing it with you this quarter with her permission.
“A Tribute to an Extremely Hard-Working, Little Understood and Sometimes Under-Appreciated Group – The Division Order Analyst Group”
Some of the qualifications to be a member of this group are: • Having the patience of a saint • Possessing the equivalent of a doctorate in public/human relations in order to be able to sympathize, empathize and just “be there” to listen (You would not believe the extremely personal outpourings they encounter) • Compassion verging on that of Mother Theresa • An unequaled desire to assist owners (even when the owners are not that pleasant) • A huge capacity for dealing with stress as a result of many factors including an immense workload, verbal assaults by land owners and transfers to Revenue Accounting that no matter how well thought out seem to go awry! • An ability to take in stride, in their very busy day, numerous phone calls from owners demanding explanations while damning the procedures, policies and decisions over which the analyst has no control • The ability to interact with and understand information provided by/and or to geology, production, marketing, land men and management • A sense of humor, camaraderie and cooperation • A very strong work ethic and… • Ethical standards that at times would more easily be abandoned. They may not be the ones who discover a new field that sets financial analysts in a tailspin or the ones to design a new drilling technique. In addition to the above, what they do contribute is daily communication with owners which may be the only ongoing contact mineral owners have with the company. Long after geology has decided where to drill, the landmen have taken the leases and engineering has de- termined the best method to use in drilling, the DO Analyst performs maintenance on the well ownership and interacts with the owners in every operated or take-in-kind well that is drilled and produces. Their response to owners will have a significant impact on future lease negotiations, consent to move rigs onto properties and other areas where “goodwill” counts very much. DO Analysts manage transfers from deaths, divorces, marriages, trusts being created or disbursed, mergers, acquisitions and divestitures. They possess a working knowledge and understanding of the numerous legal documents required to effect these changes as well as a knowledge of the individual state and federal statutes that are essential to their work. Their responsibilities span the entire life of the well as long as the company owns it. In case it still needs to be said, I am extremely proud of these employees and if you didn’t know or appreciate their contribution you should now have a new appreciation for what the Division Order Group does for the company. To you who are Division Order Analysts, a ‘tip of my hat” and sincere appreciation for your great devotion, determination, loyalty, patience and hard work. You are the BEST! Since Vicky wrote this article, we now also monitor and determine escheat and unclaimed property filings and we are called upon to ana- lyze and determine lease deduction provisions for revenue distribution. Both of these additional duties have a significant impact on the bottom line of our company financials. As most of you know, due to the effects and aftermath of Hurricane Harvey we made the decision to postpone the Institute. I am happy to say we have rescheduled it in the hope that this new date will accommodate everyone’s schedule and maybe some of you who could not come in September can now make it in November. We are welcoming new registrations and the hotel reservation link will be open until October 20. Look for the November Institute fact sheet in this edition for more dates and reminders about the Institute.
G r o w t h T h r o u g h E d u c a t i o n - J u l y / A u g u s t / S e p t e m b e r 2 0 1 7 1
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N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s
Financial Audit Report
The 2016 Financial Audit was performed by Ida Lemaster, Darryn McGee and Amy Gresham. The NADOA administrator randomly assigned AFE entries with backup, copies of checks and the bank statements for all of 2016 to the three audit committee members. Each reported that all AFE’s and check copies were in agreement with the bank records.
NADOA Profit & Loss January through December 2016
Jan - Dec 16
Jan - Dec 16
4,628.82 4,049.91 3,773.89 2,854.90
66000 · CDOA Program
Ordinary Income/Expense Income
68300 · Travel and Meetings
68400 · Site Selection
45000 · Investments
159.82 159.82
68500 · Interaction
45030 · Interest-Savings, Short-term CD
69000 · Publications
Total 45000 · Investments
69100 · Newsmagazine
31,911.74
46400 · Other Types of Income 46410 · Advertising Sales
31,911.74
15,516.00 15,516.00
Total 69000 · Publications
Total Expense
148,662.13
Total 46400 · Other Types of Income
-39,216.31
47100 · Annual Membership Dues 47105 · Member Renewals
Net Ordinary Income
81,000.00 6,075.00
Other Income/Expense Other Income
47106 · New Members
105.00
47107 · Retired Members
49000 · Institute Income 49010 · Registration
87,180.00 2,125.00
Total 47100 · Annual Membership Dues
100,925.00 2,130.00 1,613.00 8,786.00 26,100.00
47110 · Local Association Dues Income
49030 · Guest Fees
0.00
47155 · Refunds
49045 · Golf Tournament
47200 · Certification Income
49060 · Vendor Booths
2,800.00
47230 · New Member Certification
49070 · Donations
950.00 715.00
47240 · Re-Certification Fees
139,554.00
Total 49000 · Institute Income
47260 · Review/Test/Applications/Other
139,554.00
Total Other Income
4,465.00
Total 47200 · Certification Income
Other Expense
Total Income
109,445.82
70000 · Institute Expenses
109,445.82
2,333.26
Gross Profit
70005 · Institute Paypal Fees
Expense
71000 · Hotel
240,594.19
159.82
69800 · Memorial Fund Expense
72000 · Program Total 72000 · Program
2,629.74
5,396.26 2,881.02 6,089.16 3,000.00 1,953.33
60300 · Gifts & Awards
128.99
60400 · Bank Fees
72100 · Golf Tournament
1,049.92
60600 · Technologies
72500 · Institute Newsmagazine
60630 · Paypal Services
73000 · Door Prizes
1,095.27 1,095.27
60635 · Membership Transaction Fees
74500 · Bags
55.43
76000 · Registration
Total 60630 · Paypal Services
1,688.30
79000 · Institute Committee Meetings
60700 · Education Expense 60730 · Scholarships
263,990.95
24,514.57
Total 70000 · Institute Expenses
3,264.52
412.80
60740 · Webinars
70010 · Institute Liability Insurance
1,378.97
27,779.09 64,345.59
72600 · Institute Refunds
Total 60700 · Education Expense
265,782.72
62100 · Contract Services
Total Other Expense
2,175.00
63000 · Local Association Dues
Net Other Income
-126,228.72
252.45
Net Income
-165,445.03
65000 · Operations
65100 · Other Types of Expenses
1,827.00 1,827.00
65120 · Insurance - Liability, D and O
Total 65100 · Other Types of Expenses
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I would like to give a great big shout out and Thank You to P2 Energy Solutions for sponsoring the new lanyards they are furnishing for Institute this year.
I want to also thank Torrye Metoyer for her help in getting all of this accomplished. NADOA really appreciates P2 for the great looking lanyards this year. Debbie McKee, Co-Chair Registration
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N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s
A Great Big Hug from the Transportation Committee
But it is work; we need to recognize the speakers, taking time out of their lives to impart some of their wisdom on us, and the resort personnel who will be working hard to make sure everything is in place for each room, meal and night time activity. Without our esteemed guests and our sponsors, much of this would not be possible. As Committee members for Transportation we are asking you to please give a big hand to Southwest Airlines, United Airlines and Avis, which offered NADOA group discounts for travel to and from the resort. Maybe even take a moment to send them a message thanking them for their services. In this day and age people are quick to twitter or post on Facebook a negative comment or complaint and I am sure these parties have seen their share of negativity from time to time. I ask you to please let all of those parties that have contributed to this Institute know just how thankful we are for their accommodations and charitable services provided, as I am sure they do not realize just how much we appreciate what they have given us, the chance at the gift of knowledge. Sincerely, Allie Largent (Ethel) & Tamara Walthrop (Lucy)
The Transportation Committee is a two-lady show, complete and utter professionals through and through, (cough cough) well…maybe more like Lucy & Ethel! I would say there would be a fight over who is Lucy and who is Ethel, but for now let’s just say I will let Tamara take the cake with this one on the part of Lucy! We both work at Apache Corporation and we both have had careers in oil and gas and title industries, which span over almost 30 years each. Most of the time we have worked together; and yet somehow, we have remained best of friends for at least 15 of the years that I know of! I know you are shocked! We don’t look that old do we; we hear that ALL THE TIME! This has been a great honor working with some first- class, hardworking, individuals, and our hats are off to the other committee members! If not for all of the hard work of each member, this Institute would never succeed, so a great big sincere THANK YOU Ladies and Gents for all that you have contributed! We also need to look around us, at the beautiful scenery and the resort we were able to secure (twice!) for this Institute and be grateful for the opportunity granted to us, to attend a seminar in such majestic surroundings. And they call this work?
The Vendor Committee would like to say THANK YOU to all the Vendors that rescheduled to join us for Institute: • Energy Search Associates • Ensley Properties Inc. • Georgeson • InfoAge Inc. • NALTA • P2 Energy Solutions • PacoTech • Russell T Rudy Energy LLC • Texas File • Tri Energy Asset Management (Team) • Keane Unclaimed Property • Land Information Services • Legacy Royalties • LT Global Staffing
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NADOA
CANDIDATES FOR CERTIFICATION Publication of the following “Certified Division Order Analyst” applicant(s) fulfills the requirement as stated in the Voluntary Certification Policy, III C.2 which states: “…applicant’s name will be published in the NADOA Newsletter or other official publication of NADOA.” This allows the NADOA membership an opportunity to present objections to the certification of the applicant. Any objection to the certification of the applicant must be in writing and signed by a NADOA member or non-member who qualifies his knowledge and objection of the applicant. All such letters will be considered confidential and must be received by the NADOA Certification Committee at the following address within thirty (30) days following the last day of the month in which the Newsletter or other official publication of NADOA was published: Certification Congratulations to the following new CDOAs!! Kaitlin Joleen LaFlamme Katherine (Kate) Wilson Murrell Kristy Michele Peters Tanya Marie Ward
NADOA Certification Committee P O Box 44009 Denver CO 80201
If the objection warrants denial of the certification or temporary withholding of certification, the applicant will be notified by Certified Mail.
CANDIDATES FOR RECERTIFICATION
Betty Davidson – Houston, TX Bonnie Didrickson – Englewood, CO Stuart Dirks – Midland, TX Lecia Hite – Tulsa, OK LuAnn Sharp – Fort Worth, TX Daniel E Thomas – Arvada, CO
CANDIDATES FOR CERTIFICATION
Jamie Nicole Baker – Fort Worth, TX Danielle Nicole Bedingfield – Midland, TX Taylor Joann Hindes – Denver, CO Kaprice Pearson – Midland, TX JoAnn White-Velasquez – Midland, TX
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N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s
Counterpart
Connection
Jeff Kliewer, Local Association Coordinator Jeff Kliewer l i i
APPALACHIAN BASIN ASSOCIATION OF DIVISION ORDER ANALYSTS (ABADOA) Association Based in the Pittsburgh, Pennsylvania Area Serving NY, OH, PA, WV (Inactive)
CAPDOA’s June seminar went off without a hitch! The day started off with Geologist Gayle Riggs, Devon Energy, presenting “Geology Unplugged, Home Grown: Our Unconventional Oil & Gas Industry” which included SCOOP – STACK among other things. For those of you familiar with Oklahoma you already know this isn’t the name of a new breakfast cereal. SCOOP stands for South Central Oklahoma Oil Province; STACK stands for Sooner Trend Anadarko Basin Canadian Kingfisher. These are the newest plays in the Oklahoma area. Using a slice of chocolate cake, Gayle explained the processing of drilling through various formations. Unfortunately, we didn’t get to actually eat any cake. Gayle shared a wealth of knowledge and her strong passion for geology. Tom Seng, University of Tulsa, presented “Financial Energy Markets and Hedging” which lead us into Tyson Rutledge speaking on “Midstream Issues.” There were no dessert analogies in either of their presentations. However, many attendees commented they enjoyed being exposed to the topics and they learned something. Brett Hutton traveled from Tulsa to present “Smart Leadership.” As the author of “Smart Leadership: How Top Leaders Boost Performance, Production and Profitability by Creating Exceptional and Engaging Cultures,” Brett challenges audiences to think differently about the role of the company culture and its impact on productivity and performance. We rounded out the day with Gary Heinen, Chesapeake Energy and Wayne Anderson, Kirkpatrick Oil Company,
………………………………… ARKLATEX ASSOCIATION OF DIVISION ORDER ANALYSTS (ALTDOA) Association based in the Shreveport, LA Area (Inactive) ………………………………… CAPITAL ASSOCIATION OF PROFESSIONAL DIVISION ORDER ANALYSTS (CAPDOA) Association based in the Oklahoma City, OK Area
Keynote was provided by Alan Cody,VP of Land at XTO; he spoke on leadership by recapping a presentation and speech he attended that was given by Colin Powell. Our last two classes were taught by D. Faith Orlowski of Moyers Martin. She spoke to us about “Mineral & Leasehold Inheritance – How to determine what it is and what to do about it”, as well as “Satisfying Title requirements –When is enough, enough?” Her lively presentations along with interjected stories provided the cherry on top of one of the best Spring(ish) Seminars Dalworth has put on! A big thanks to Megan McKee, Eli Murray, Kim Ginter, & Lewis Box (Dalworth Board Members & Presenters) and our speakers Paul Strickland & D. Faith Orlowski for putting on a truly wonderful seminar! For information regarding DALWORTH, please visit our website at www.dalworth.org . ………………………………… DENVER ASSOCIATION OF DIVISION ORDER Q&A with a New Division Order Analyst Matt Finley, Division Order Analyst at Encana Services Co Ltd. Q: How long have you been a DO Analyst? A: 5 Months Q: What do you enjoy about DO work? A: It keeps you on your toes. I am starting to find out no two transfers or well set ups are the same. Q: What struggles have you encountered and how did you overcome them? A: I have struggled to learn all the rules of probate in Texas but having a great team to help mentor and train me has made all the difference. Q&A with a Veteran Division Order Analyst Colleen Harlan, CDOA Lead, Division Orders Encana Services Co Ltd Q: How long have you been doing DO work? A: I have worked in the oil and gas industry for 24 years, 18 of those have been spent doing DO work. I started in revenue accounting and was promoted into DO work, which was a smooth transition since the two groups need to work so closely together. Over the years I have worked in both DO and revenue accounting but I enjoy the DO work the most. ANALYSTS (DADOA) Association based in the Denver, CO Area
giving a panel discussion on “Oklahoma Homestead Rights & Distribution of Proceeds and Ownership Issues.” Melissa Gardner, Phillips Murrah, presented “Title Attorney/DO Analyst Dynamic: How do we both get what we need?” Gary, Wayne and Melissa have been frequent presenters at CAPDOA events over the years. As always there were many wonderful comments regarding these speakers. In fact, a few members have suggested ideas for future topics based on their presentations. Our August luncheon will be a presentation on the Landman and DO Analyst Relationship. Thanks to all of the speakers for taking time to support CAPDOA.
For more information regarding CAPDOA, please visit our website at www.capdoa.org. ………………………………… DALWORTH ASSOCIATION OF DIVISION ORDER ANALYSTS (DALWORTH) Association serving the Dallas/Fort Worth, TX Area
Dalworth recently hosted their Spring(ish) Seminar held at the offices of XTO Energy in Downtown Ft Worth. We kicked off the seminar with a panel discussion covering the various processes and procedural differences between small, medium and large companies. Topics ranged from various geographic assignments to cradle to grave well setup vs division of duties (setup/ maintenance) and also how other non-DO duties come to be worked by a DOAnalyst. Next up was Paul Strickland who covered Louisiana Succession, Usufruct, & Small Estate Succession procedures. Classes were also taught by our own Eli Murray who covered calculations and building a DOI with and without payouts. Eli’s clever presentations worked in various movie references to keep our attendees engaged and entertained.Thankfully we had lunch afterwards to give our brains a rest. Our lunch
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Q: What do you enjoy about it? A: Organizing the owner’s interests and then talking to them makes every day unique. The underlying basics of DO work is pretty much the same but every state, well, transfer, computer system and owner are different which keeps it really interesting and at times a little frustrating too. I also enjoy the research and putting the pieces of the puzzle together. DO work is like being the caretaker of a Money Tree for our Owners that we look after every day. Q: What are some of the challenges you encountered and how did you overcome them? A: Some of the challenges I have encountered are related to the different computer systems I have worked on and working with difficult owners. When it comes to different systems, I think we all have our favorites but you have to work with what you have. Every system has its pros and cons, you just need to find the pros and offer solutions and improvements for the cons. As for difficult owners, I have learned not to take it personally. Usually if you let them vent, listen to them and show empathy for their situation, they will calm down and work with you. What we do can be confusing, and you just have to be clear and patient and responsive to our owners (and try not to tell them that their Money Tree is slowly dying and that they better get used to it not being there someday.) Q: What advice would you give to a new analyst? A: My advice to a new analyst would be to never hesitate to ask a question and to volunteer for different projects in the department, whether it’s working escheat, creating a manual, system testing or working on the latest acquisition or divestiture. Variety is the spice of life and that is true with DO work too! For more information regarding DADOA, please visit our website at www.dadoa.org. ………………………………… HOUSTON ASSOCIATION OF DIVISION ORDER
The speakers kept us grounded, however, as we listened with interest to a variety of specialists in their fields. From General Training tips to specific facts about Acquisition and Divestitures, Calculation of Mineral Interests, Probate andTitle Curative, we covered a lot of ground and consumed some tasty treats in the process! Alyce Boudreaux Hoge led the morning with a hilarious Cajun accent that was worth the trip, along with some tried and true reminders about business behavior and office etiquette. Marsha Breazeale presented a splendid talk on A&D, which is a popular topic these days. Eli Kiefaber informed us in Oil and Gas Royalty Issues that had this DOA rethinking some long ago calculations! Matt Schlensker and Kacie Bevers gave us some insight and advice on Oklahoma Probate andTitle Curative. Nancy Baird Bridged the Generation Gap and had us in stitches as she was self-admittedly the most colorful of our speakers! The day started and ended with training and I can take a hint. CDOA is next on my TO DO list! Speaking of… the Summer Conference has been approved for 7 credits! Let’s get certified! A hearty thanks to all sponsoring companies who provided more goodies than I can count and to all speakers and HADOA leaders for an outstanding conference that went as smooth as silk! Hope to see you in November at NADOA’s Institute in Bastrop! November 8 is just around the corner! Take I 10W toTX 71 to Lost Pines Resort for some fineTexas Hospitality. Register today! Cosette Barnett, HADOA Historian cosetteb@gmail.com For additional information regarding HADOA please view our website: www.HADOA.org . ………………………………… MID-AMERICA ASSOCIATION OF DIVISION ORDER ANALYSTS (MAADOA) Association based in the Wichita, KS Area Be sure to check out our website at maadoa.org. It has useful links to various operations in Kansas. Diana Richecky, MAADOA Secretary diana@dukedrilling.com 316-267-1331 …………………………………
ANALYSTS (HADOA) Association based in the Houston, TX Area
HADOA Summer Seminar was a perfect time to connect with friends, enjoy great BBQ, and make new connections. We kicked off the season with a delightful day of food and facts at the seminar June 27, hosted by Anadarko, at its serene office park in theWoodlands. One could almost forget what we came for!
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PERMIAN BASIN ASSOCIATION OF DIVISION ORDER ANALYSTS (PBADOA) Association based in the Midland, TX Area
I went around the office here at Pioneer Natural Resources and visited with some of our veteran Division Order Analysts and picked their brains on what advice they would give to a new Division Order Analyst. After wading through the knee jerk responses often meant to be funny
WE Learned, WE Laughed, WE Lived a Great Day at the SADOA Summer Seminar!
like “Run” or “honey works better than vinegar”, I got some very important nuggets of knowledge. Mindy Warren’s advice was “save for the downturn”, as we all know that time will come. Larry Eudy’s nugget of knowledge was “make it add up to zero”. I think he meant figuratively and metaphorically. Cynthia McGill’s advice was “sweat the details”, because you can’t cut corners in this business. Julie Montgomery said to “ask as many questions as you can and strive to learn as much as possible” and Sally Holt’s advice was “read the entire document”. Pat Cantu’s advice was to “listen”. With these words of wisdom, I think any newbie analyst can become a shining star in their department. We were off for the summer but geared back up for our 2nd annual CDOA review on August 17-19. For more information regarding PBADOA, please visit our website at www.pbadoa.org. ………………………………… SOONER ASSOCIATION OF DIVISION ORDER ANALYSTS (SADOA) Association based in the Tulsa, OK Area
Stan and Michael, SADOA’s most and least O&G years, making new friends.
At our May luncheon, SADOA identified the analysts with the most and least O&G experience, meet Stan Pinney (43 yrs) and Michael Stefanatos (2 yrs). Stan, currently employed at Chesapeake, believes that we must treat our owners with the utmost respect, not knowing what level of knowledge they may possess. Stan says “In this industry we must all endeavor to persevere”. When he found the O&G industry, Michael found people who loved their jobs and credits SADOA for providing him a greater level of understanding. He says there is a lot to learn as he works at Associated Resources (ARI), but his knowledge is growing every day and he is anxious to assume a greater role in the industry as he lives his favorite quote: “It is ALL for the experience”. SADOA is ready for Institute! Congrats to Lecia Hite (Laredo), our lucky winner of the SADOA $1000 scholarship to attend the 2017 NADOA Institute. Also to Paula Staires (Cimarex), winner of a NADOA Tuition Scholarship. For more information regarding SADOA, please visit our website at www.oksadoa.org. …………………………………
The SADOA Summer Seminar was held in June and was a great educational experience for all who attended. The group enjoyed individual snack bags as we expanded our knowledge on Transfer on Death Deeds, Ethics, BIA leasing, Trusts, Litigation Developments and exciting new possibilities for reducing water from injection wells, thought to be related to a recent uptick in Oklahoma earthquakes. Thanks to all who attended and benefited from the great peer interaction and excellent speakers.
NADOA Welcomes the following NEW MEMBERS!! Apache Corporation Hiten Patel Fortis Minerals Lindsey McGee
Riverside Energy Michigan, LLC Catherine Thomas
BHP Billiton
Guidon Energy
PA Case Law Update Kassandra Kangieser Maggie Keng Karen Teel
Southwestern Energy
Vincent Parasco
Headington Energy Partners LLC Katie Sherer
CAMS
Spindletop Oil & Gas Co. Dick Mastin
Daniel Sneed
Independent
CGI
Judith Nelms
Statoil
Mark Bentley Samuel Strain
Karen Robbins Gurpinder Sarao
Independent Consultant Cosette Barnett
CGI Technologies
Statoil Gulf Services LLC Lisa Warren
Angelica Oubre
Kinder Morgan
Ashtyn Fregia
Chesapeake Energy Corporation Zane Mellinger Caitlin Vaughan
Statoil Inc
Kinder Morgan CO2 Company, LP Stefany Watson
Sarah Cunningham
Statoil US Holdings
Chisholm Oil and Gas Operating, LLC Travis Krapff
Kirkpatrick Oil Company Suzanne Kerr
Henry Newcomb
Statoil USA Onshore Properties Eryn Hygh
Cima Energy Ltd.
Mack Energy Co.
Christine Burton
Marge Thompson
ConocoPhillips
Newfield Exploration Company Chelsea Rawls
Surge Energy
Brooke Couch Joshua Deal
Angela Shockley
Parsley Energy LP
Terra Energy Partners Michael Moon
Crownquest Operating Marta Ruiz Denbury Resources LLC Brenda Lunsford Linda Sheehan
Natasha Congrove Elsie Gilmore Liza Luevano Clayton Pattison Whitney Shine
Texas Scottish Rite Hospital for Children Tammy Fields Whiting Oil and Gas Corp Vicki Metz WildHorse Resources Management Company Tisha Thurman
QEP Resources
Devon Energy
Natalie Cunningham Melissa Yowell
Richard Codopony
Eclipse Resources
Range Resources Corporation Cameron Hull Lauren Kamas Ronda Pennington
Michael Muller
EOG Resources
XTO Energy Inc
Amy Gipson Judy Guebara
Evan Hanes Laura Martinez David Sonnen
Riverbend
Matthew Dutcher
Ergon Oil Purchasing Inc Bridget Grant
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Legislative
Update
Oklahoma House Bill 2429 was signed by Governor Mary Fallin on May 31, 2017 and became effective July 1, 2017. HB2429 increases the oil and gas production tax rate for wells that are taxed at 1 percent to 4 percent. The tax increase is expected to raise about $95 million to help offset the budget deficit the state was facing for the 2018 fiscal year. Senate Bill 867 , creating the Oklahoma Energy Jobs Act of 2017, was signed by Governor Mary Fallin on May 31, 2017. The bill allows energy companies to drill long laterals, a/k/a horizontal wells that extend longer than a mile in nonshale formations. Previously, such horizontal wells were only permitted in shale formations. The Oklahoma Corporation Commission (OCC) worked within the short time frame to hold hearings and write Ad Valorem Taxation – Liens on Mineral Production: HB0220 amended provisions of a Wyoming statute relating to liens on mineral production. HB0220 amended Wyoming Statute § 39-13-108, addressing ad valorem tax lien enforcement, to specify that a lien under the section shall not apply to an owner of a royalty interest, overriding royalty, or other interest which has been carved out of the mineral estate who is not a delinquent taxpayer. The legislature passed HB0220 in order to remove ambiguities which existed as to whether or not an ad valorem tax lien could extend to these interests. Federal Land Wind and Solar Energy Revenue – State Share: SJ0002, a joint resolution passed by the legislature, may be of note to parties interested Wyoming
new rules. The OCC approved emergency rules related to the expanded lateral drilling late in August; however, Matt Skinner with the OCC stated “...this is a very complex subject. We’re quite sure that other rules will be needed and work is already underway on those. But, for now, there was broad agreement with all the stakeholders who were involved in the rulemaking process that this was as good a way to start as any.” The legislation and new rules were opposed by groups such as the Oklahoma Sierra Club, citing “concerns over continued fracking/ earthquakes/ production waste…”. The OCC is also concerned with protecting correlative rights and the numerous existing producing vertical wells in the state.
The 2017 Wyoming Legislative Session concluded in March. Passage of the following impacts the energy industry.
in renewable energy and public lands. SJ0002 calls upon the United States Congress to enact legislation requiring the federal government to share 50% of fees and revenues from wind and solar energy development on federal lands with the states where the wind and solar sites are located.
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N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s
TEXAS ROYALTY COUNCIL 85TH Regular Legislative Session
With more than 6000 bills filed during the 85th Legislative Session, it was, to say the least, busy. According to the Texas Legislative Reference Library, a total of 6,631 bills were introduced during the session. Of that total, over 1,200 bills were passed and sent to Governor Abbott. The Governor signed, let bill become law without signature, or vetoed legislation that was passed during the regular session. However, when it came down to bills that directly affected our oil and gas industry, the outcome was positive with no loss of tax incentives or other harmful constraints. Sincerely, Tricia Davis, President - Texas Royalty Council - American Royalty Council The Railroad Commission of Texas Sunset bill - HB 1818: After four legislative sessions, the RRC Sunset bill finely passes! This bill allows the commission to continue for another 12 years with oversight for regulation and safety of our important industry and to include funding to meet their needs. The oil and gas industry will have certainty for developing energy that will not only help to support our public schools, build roads and other but to continue to support more than 700,000 Texas residents that receive royalty income. This bill was the most important bill of the session. The bill was signed by Governor Greg Abbott on May 22, 2017. Thank you Chairman Drew Darby, Chairman Larry Gonzales and Vice Chair Senator Van Taylor for this very important success. Royalty Check Stubs - HB 129: requires a payor of oil and gas royalty payments by a paper check to secure the consent of a royalty interest owner before providing the check stub information in a manner other than paper. The bill was signed by Governor Greg Abbott on May 29, 2017. Special thanks goes to TIPRO for all their work on this bill. Thank you, Speaker Craddick. Federal Regulations Resolution (Federal Regulatory Energy Delegation – FRED) Senate Concurrent Resolution - SCR 26: The Texas Legislature recognizes that this period in our nation’s history represents an opportunity
and urges the federal government to work with Texas to identify overreaching regulations that have been implemented especially those promulgated under the authority of the US Environmental Protection Agency, the US Department of the Interior and US Department of Energy over the past eight years which were largely aimed at negatively impacting the oil and gas industry to determine whether the rules should be revised, delegated to state agencies, or eliminated in order to correct the misuses of federal regulatory power to ease the overly burdensome regulatory patchwork on the oil and gas industry in Texas. “Texas oil and gas fields have provided a pathway toward American energy independence from foreign powers, have afforded financial security to hundreds of thousands of individuals in Texas, and have delivered safe and reliable energy to fuel our nation’s economy…” This is very important for Texas. Thank you Chairman (s) Darby and Estes also John Tintera and The Texas Alliance of Energy. Senate Concurrent Resolution 26 was sent to the governor on May 26, 2017.
DEPTH. KNOWLEDGE. SCALE.
At Concho, we believe our success is the net result of our assets and resources working together to achieve our strategy. It’s our top-tier team, our in-depth knowledge of the Permian Basin, and the scale of our operations that have made us an industry leader and the largest pure-play Permian operator.
LEARN MORE AT WWW.CONCHO.COM
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G r o w t h T h r o u g h E d u c a t i o n - J u l y / A u g u s t / S e p t e m b e r 2 0 1 7
Shale Development Impacts on Texas A report on the effects of shale development was released in June by the Academy of Medicine, Engineering and Science of Texas (TAMEST). The “Environmental and Community Impacts of Shale Development in Texas” report looked at the key impact areas of seismicity, land, air, water, transportation and economic and social.
fracturing uses large amounts of water, although hydraulic fracturing in the state represents less than 1% of total water use. Further research is needed into technologies using recycled produced water for fracturing. A study published by the USGS determined that unconventional oil and gas production is not currently a significant source of methane or benzene to drinking water wells in regions sampled in the Eagle Ford, Haynesville and Fayetteville areas. Transportation: Modern unconventional wells require a large number of trucks in developing a well and leading to production and TAMEST examined the effects of increased truck traffic caused by development. Many areas of the Permian basin are sparsely populated and the roads were not designed to handle the number of trucks needed for current development. The two recommendations of TAMEST are: development of other ways to transport materials to relieve stress on the road system and active preparation in advance of drilling activity to improve the road system before the increase in traffic occurs.
TAMEST membership includes all Texas-based members of the National Academies of Sciences, Engineering and Medicine and Texas Nobel Laureates. Seismicity: Although faults are widespread through Texas (most are stable and not prone to generating earthquakes) and earthquakes have increased in recent years, they are still infrequent. Oklahoma experiences about 60 times more earthquakes of magnitude greater than M3.0, whereas between 2008 and 2016, Texas averaged 12 to 15 earthquakes of magnitude greater than M3.0. Earthquakes smaller than M3.0 are generally unnoticeable by people. TAMEST conclusions confirm previous reports that potentially induced earthquakes are associated with water disposal wells rather than hydraulic fracturing. Data sharing between groups to analyze induced seismicity is TAMEST’s recommendation. Land: While the amount of drilling activity using multi- well pads in the past decade has had a significant impact on the landscape, as many vertical wells would have had a much greater impact. TAMEST did recommend adopting a surface damages act in Texas, which does not currently have such legislation. Also, although there is a significant amount of data available, nothing is on a single usable database. Air: Air quality emissions from oil and gas operations have increased with greater production; however, a small number of wells are responsible for the majority of the emissions. Liquid storage tanks are particular culprits and as an example, are responsible for 90% of the cases of detectable emissions in the Barnett Shale. TAMEST recommended using reliable and relatively inexpensive emissions detectors such as infrared cameras to identify the locations that need repair. Water: Agreeing with most other reports, TAMEST concluded that the great separation in depth between aquifers and oil-bearing zones makes fracturing into drinking water zones highly unlikely and no contamination has been observed in Texas. Hydraulic
TABLE 7-2 Number of Trucks Needed to Develop a Well.
Number of Trucks
Barnett Shale
Eagle Ford Shale
Permian Basin
Well Development
Drilling pad and construction equipment Drilling rig, equipment, materials, and fluid Fracturing equipment: pump trucks, tanks
70
70
70
117
117
117
74
74
74
Fracturing water Fracturing sand
533
1,021
527
57
147
66 11
Other additives and fluids Flowback water removal
4
24
133 988
255
132 997
Total
1,708
SOURCE: Quiroga et al., 2016.
Economic and Social: Exact numbers are subject to debate; however, available economic data indicates that oil and gas development has positive effects locally, regionally and state-wide in Texas. 2013 estimates for the oil and gas industry in the Permian Basin (prior to the latest Permian boom) indicated that over 546,000 jobs were sustained and $137.8 billion in economic output was generated. Although not as great as the Permian, estimates for 2013 activity in the Barnett Shale showed $12.8 billion in economic output and 115,000 jobs and in the Eagle Ford $87.8 billion in economic output and 150,000 jobs.
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N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s
These materials reflect only the personal views of the author and are not individualized legal advice. It is understood that each case is fact-specific, and that the appropriate solution in any case will vary. Therefore, these materials may or may not be relevant to any particular situation. Thus, the author and their law firm cannot be bound either philosophically or as representatives of their various present and future clients to the comments expressed in these materials. The presentation of these materials does not establish any form of attorney-client relationship with the author or their law firm. While every attempt was made to insure that these materials are accurate, errors or omissions may be contained therein, for which any liability is disclaimed. Study Finds No Harm to Drinking Water Sources from Oil and Gas Drilling By: Donald C. Sinclair II Of Counsel
A recently published three-year study conducted by researchers from Duke University, The Ohio State University, Pennsylvania State University, Stanford University, and the French Geological Survey Laboratory has concluded that there is no evidence that unconventional oil and natural gas extraction (deep formation horizontal drilling and hydraulic fracturing) has resulted in groundwater contamination in five Northern Appalachian Basin counties in West Virginia. The study was supported by grants from the National Science Foundation and the Natural Resources Defense Council. The study monitored the geochemical variations in drinking water wells before and after the installation of nearby shale gas wells. According to the authors, the study “[p]rovides a clear indication for the lack of groundwater contamination and subsurface impact from shale gas drilling and hydraulic fracturing .... Saline groundwater was ubiquitous throughout the study area before and after shale gas development, and the groundwater geochemistry in this study was consistent with historical data reported in the 1980s.” The authors observed significant relationships between elevated chloride concentrations (and bromide/chloride ratios) and geological and topological features; however, associations between elevated chloride concentrations (and bromide/chloride ratios) and proximity (<1 km) to shale gas wells
were not observed. The isotopic “fingerprints” of the groundwater samples analyzed in the study “were not consistent with the signature of hydraulic fracturing fluids,” but rather, reflected indigenous groundwater conditions. Groundwater from this study area is dominated by biogenic methane. Importantly, it appears that both biogenic and thermogenic gases in the groundwater in the studied oil and natural gas producing regions of the Marcellus shale play are unrelated to shale gas development (i.e., not of anthropogenic origin). General water chemistry parameters (e.g., metals) were consistent with regional background concentrations.
If you have any questions about the impact of the study, please contact the author of this article.
About the Author:
Donald Sinclair | 304-231-0458 |
donald.sinclair@steptoe-johnson.com Donald Sinclair concentrates his practice on occupational and environmental litigation in the energy and transportation sectors, including air, water, and soil quality; toxic torts; occupational disease;
toxic and traumatic encephalopathy, seizures, and syncope; the evidence-based determination of medical causation; and the admissibility of novel and complex scientific evidence.
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