2024 Q1

National Association of Division Order Analysts January / February / March 2024

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Volume MMXXIV • No 1

Contents Feature

Articles

NADOA 2024 Officers President Vicki Danielson, CDOA 1st Vice President Kimberly Bowman 2nd Vice Presiden t Jean Hinton Treasurer Valerie Wible, CDOA Corresponding Secretary Lola Strickland Recording Secretary Melanie White, CDOA

Legal Updates Drilling Restrictions in the Permian...............................16 Colorado Supreme Court Clarifies Law on Oil & Gas Leases......................................................................17 North Dakota Supreme Court - Powell v Statoil (Suspense Statute)..................................................................18 National Niche............................................................................28 OERB Outlook.............................................................................30 Alternatives and New Technology.......................................31

In This

Issue

President’s Corner.............................................................1 Decimal Points....................................................................2 Membership Recognition................................................3 Nominations for 2025.......................................................5 Certification......................................................................... 5 Cob Webs...............................................................................8 2024 Institute.......................................................................9 Ellis Rudy Memorial Scholarships............................15 Interaction - NAPE...........................................................16 Counterpart Connection................................................22 New Members....................................................................30 NADOA Board & Committee Chairs...........................32 Calendar of Events..........................................................34

The NADOA News Magazine is a quarterly publication of the National Association of Division

Order Analysts P O Box 1656 Palm Harbor, FL 34682

Subscription: By membership to NADOA, at $100.00 per year. News Magazine Editor Rona L. Erickson, CDOA rona.nadoa@gmail,com

Graphic Design, Paul Beach

On the Cover: Oklahoma City Skyline, Photo courtesy of Oklahoma City Convention and Visitors Bureau.

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

Vicki Danielson, CDOA 2024 NADOA President

I am so excited to be your 2024 NADOA President. For those of you who do not know me, I am a Division Order Analyst with over 40 years of experience in the oil and gas industry. I have worked for 8 different companies ranging from small independents to major corporations and have gained a wealth of knowledge from my different roles as an analyst and Division Order Manager. I am here to lead and represent the interests of my fellow professionals in this organization. We have several webinars already scheduled which will offer a variety of topics with superior speakers. Please attend as many as you can to increase your proficiency in oil and gas. I want the new generation coming into oil and gas to have confidence in themselves and the proper tools to be successful analysts in their jobs. This year our NADOA Annual Institute will be held October 2-4 at the Omni in Oklahoma City, Oklahoma. The Institute Committee is currently working on making this Institute one you will never forget, planning lots of fun and activities along with learning. Please join me as we move into 2024 to make this organization strong and valuable to all. I welcome your suggestions at any time. Together we can continue to make NADOA a distinguished organization.

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NADOA

Decimal Points

Regional Reporters

Remember to keep your NADOA directory information updated. Due to all the changes taking place in our industry and the world, it is more important than ever to maintain professional contacts and receive the educational benefits of membership in NADOA. NADOA online Job Bank has new postings. Visit http://www.nadoa.wildapricot.org/page-662233 ADVERTISE WITH NADOA Advertising in the NADOA Newsmagazine is a great way to get your business name out to NADOA members. Contact Cheryl Hampton at champton@limerockresources.com for details. If you have a suggestion for someone to act as a Regional Reporter to help NADOA keep abreast of current legislation and legal issues for your region, please submit the name or the name of the firm. Second Quarter.................................... May 17 Special Institute Edition........................July 12 Third Quarter....................................August 23 Fourth Quarter............................November 15 2024 News Magazine Deadlines

ABADOA

Steptoe & Johnson PLLC Ryan.daniels@steptoe-johnson.com

CAPDOA DADOA

OPEN

Kelly Sandoval, CDOA Kelly.sandoval@sitio.com

DALWORTH Lewis Box, CDOA lewis.box@gmail.com HADOA Emily Sheffield

esheffield@oglawyers.com

PBADOA

OPEN

SADOA

Dena Blevins Drblevins2014@gmail.com Jackie Clotfelter, CDOA jclotfelter@hannaoilandgas.com Amy Flaming Amy.flaming@chsinc.com Kimberly A. Backman kbackman@crowleyfleck.com

Arkansas

Kansas

North Dakota

New Mexico

Zachary P. Oliva zoliva@oglawyers.com Margaret Patton mpatton@pattonfirm.com

Louisiana

2024 News Magazine Team Rona Erickson , CDOA Editor Susan Bradley, CDOA Associate Editor Cheryl Hampton Associate Editor

Is your company’s server blocking NADOA emails? Do you have issues logging into the NADOA website? Download the Wild

Apricot for Members WILD APRICOT App to see your NADOA membership details, get quick access to the NADOA Membership Directory or register for NADOA events.

Armando Lopez Associate Editor

Sonya Turner, CDOA Associate Editor

N at i onal A ssociation of D i v i s i on O rder A nalys t s

2024 Nomination form for NADOA Membership Recognition

DO YOU HAVE A MENTOR, TRAINER, SPEAKER OR COMPANY YOU FEEL DESERVES A PAT ON THE BACK FOR ALL THEY DO??? NOMINATE THEM FOR ONE OF THE AWARDS BELOW!!

I would like to nominate ___________________________________________________ for the Ellis Rudy Memorial Lifetime Achievement Award. This award is presented to the NADOA member who has exemplified the Division Order profession through demonstrated leadership contributions to the industry and the profession during his/her career. Please detail the nominee’s involvement in NADOA, the services they have performed and/or contributions they have made on page 2 (You may attach a separate sheet if necessary).

I would like to nominate ___________________________________________________ for the NADOA Membership Recognition Corporate Award. Presented to the group or company that has contributed to NADOA’s growth and development, the Division Order profession, and/or the industry during the past year.

I would like to nominate ___________________________________________________ for the NADOA Membership Recognition Award for Education. This award is presented to the NADOA member who has dedicated their time and service to the betterment of Division Order Professionals through influence and mentorship.

I would like to nominate ___________________________________________________ for the NADOA Membership Recognition Award for Interaction. This award is presented to the NADOA member or affiliated organization who has had a positive community impact and extraordinary service and dedication in leading and promoting the Division Order profession. I would like to nominate ___________________________________________________ for the Russell Schetroma Memorial Speaker’s Award. This award is presented to an individual who has contributed to NADOA’s growth and development by speaking, educating, and sharing knowledge on numerous occasions to the NADOA Membership, the Division Order profession, and/or the industry during the past year.

G rowth T hrough E ducat i on - J anuary / F ebruary / M arch 2024 Send nominations to: Member Recognition Awards Committee, c/o Sonya Turner (sturner@farmersnational.com) Nominations will be accepted through JUNE 1, 2024

2021 Nomination Form for NADOA Membership Recognition 2024 Nomination Form for NADOA Membership Recognition

I would like to nominate ___________________________________________ for the NADOA Membership Recognition Award for Interaction . This award is presented to the NADOA member or affiliated organization who has had a positive community impact and extraordinary service and dedication in leading and promoting the Division Order profession. Please detail the nominee’s involvement in NADOA, the services they have performed and/or contributions they have made (You may attach a separate sheet if necessary). Please detail the nominee’s involvement in NADOA, the services they have performed and/or contributions they have made (You may attach a separate sheet if necessary).

___________________________________________________ Signature ____________________________________________________ Please Print Name ____________________________________________________ Email Address

N at i onal A ssociation of D i v i s i on O rder A nalys t s Send nominations to: Member Recognition Awards Committee, c/o Sonya Turner (sturner@farmersnational.com) Nominations will be accepted through June 1, 2024

ELECTION SEASON IS HERE! LOOKING FOR CANDIDATES FOR THE 2025 NADOA BOARD POSITIONS: 2nd Vice President Treasurer (2 year Term) Recording Secretary Corresponding Secretary

Contact Norma Dooley by June 1, 2024 ndooley@wagneroil.com For more details on positions, log in to NADOA.org / Publications / Bylaws.

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: NADOA Certification Committee P O Box 1656 Palm Harbor, FL 34682 If the objection warrants denial of the certification or temporary withholding of certification, the applicant will be notified by Certified Mail. CANDIDATES FOR CERTIFICATION

Amy Potter – Houston, TX

Kim Stetler – Houston, TX

CANDIDATES FOR RECERTIFICATION

Christopher Anderson – Oklahoma City, OK Charlene Bilski – Houston, TX Lisa Buffaloe – Houston, TX Janet Cavanah – Tulsa, OK Vicki Danielson – Houston, TX Mary Drennan – Dallas, TX Lori Graham – Jay, OK Melissa Fontana – Houston, TX Michelle Harris-Fairclough – Oklahoma City, OK Jamie Hausher – Tulsa, OK Lesley Laidley – Houston, TX

Gerald Llewellyn – Bartlesville, OK Amanda Young Lynch – Oklahoma City, OK Charles (Darryn) McGee – Collinsville, OK Eli Murray – Dallas, TX Kim M Stephens – Oklahoma City, OK Amy Stiner – Oklahoma City, OK Sonya Turner – Tulsa, OK

Keith Voytoski – Houston, TX Sherry Werth – Houston, TX Quint Withers – Jackson, MS Amanda Worden – Houston, TX

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CONGRATULATIONS TO THE FOLLOWING NEW CDOAS!! Tyrell Allen – Houston, TX Kelly Hunt – Tomball, TX CDOAs with January renewal dates be sure to submit your 2023 employment credits using the Certification Self-Service portal on the NADOA website. This is a pre-approved dropdown item. TIME TO RECERTIFY? If you are a CDOA whose certification expired January 1, 2024, you should have received a Re-Certification Application electronically. If you did not receive your application, please contact the certification committee at cdoa@nadoa.org . 2024 CERTIFICATION COMMITTEE cdoa@nadoa.org

Hello - my name is Stephanie D. Moore and I’m excited to be taking over as chair of the CDOA Committee after all the hard work our previous Committee(s) have put in. As the 2024 CDOA Liaison, I’d like to introduce the new CDOA Committee to you (see below). Stephanie D. Moore, CDOA CDOA Committee Liaison/Chair 2024 Houston Metro

Janet Cavanah, CDOA CDOA Committee – Credit Approvals/Maintenance Tulsa Metro

Belinda Cathey, CDOA CDOA Committee – Email Management Houston Metro

Melinda (Mindy) Warren, CDOA CDOA Committee – CDOA Credits/Testing Houston Metro

Sonya Turner, CDOA CDOA Committee – Recertification/Certificate Handling Tulsa Metro

Nora Marquez, CDOA CDOA Committee – Employment Credits, New CDOA Maintenance Houston Metro

Connie Wilcoxson, CDOA CDOA Committee – New Applicants Oklahoma City Metro

As a CDOA, you might not know the work involved in being on this Committee. It’s been a challenging few years in the industry involving all aspects, including professional associations. I am happy to

Kelly Sandoval, CDOA CDOA Committee – Policies Denver Metro

N at i onal A ssociation of D i v i s i on O rder A nalys t s

say that over the past year, the new CDOA website is running like it should and there have been only a few system problems. With workloads and life, we did get behind on some items, but are quickly getting caught up. I’d like to personally thank Lewis, Sherry, Bonnie, Megan, Darryn, and Yoli for the enormous amount of work they’ve done getting the new system up to date and keeping things going. There is a bright light at the end of this tunnel! The committee is currently working on items that will make things easier going forward (once implemented) for CDOAs. Look for an email soon on a CDOA ONLY webinar to learn tips and tricks on using the system. For now, please see the reminders below. • Recertifications: We are still seeing applications coming in and are working through these as quickly as possible. Sonya Turner, with the help of Darryn McGee, has actively been keeping up with and processing these, so please be patient. Stickers should be going out soon.

• CDOA Account Information: Please make sure to visit the CDOA Certification website and update your contact information in this system. Unfortunately, when you update information on the NADOA site, it does not update on the CDOA site. • Credit Requests: Please send all requests for CDOA credits to the certification cdoa@nadoa. org a minimum of 2 weeks prior to the event - the earlier the better. We will be implementing a form to request these credits by the middle of 2024. Look for additional details coming soon. • Pre-approved Credits: Pre-approved credits do not show up until after the event has occurred, and you won’t be able to submit until after the event. If you are attending a Local, NALTA, or AAPL event, these are usually pre-approved. Please don’t create a credit for these events as it causes problems with the system and extra work for the Committee. We ask that you exercise patience as we continue to get caught up and work through any further issues in the system.

Missing Something You Earned?

If you recertified in 2022 and you have not received your 2028 sticker, please send us an email with your name and adddress to cdoa@nadoa.org. 2028

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Cob Webs

speakers to webinars@nadoa.org . Details for upcoming NADOA Webinars can be found at: https://nadoa.org/news-events/ The webinar committee is looking for volunteers. Opportunities include: creating webinar flyers, contacting speakers before a webinar event to obtain biographies and presentations, help modernize NADOA’s GoToWebinar site. Please email webinars@ nadoa.org if you are interested. The 2024 Webinar Co-Chairs, Gordon Gallet, Heather Lister and Jamie Meyer would love to hear from you! Steptoe & Johnson PLLC – Visit: https://www.steptoe-johnson.com and click on News for details. The Steptoe webcasts are recorded. To access previously recorded webcasts, go to www.Steptoe-Johnson.com and enter Webcasts in the search feature. Oliva Gibbs LLP – Energy Education Series: Visit www.oglawyers.com/ events for further information. If you are aware of other educational webinars, please advise the NADOA News Magazine of details to be added to the Calendar of Events ( magazine@nadoa.org ).

Educational webinars can be approved for 1 (one) CDOA certification point. NADOA webinars, Steptoe & Johnson PLLC webcasts

and Oliva Gibbs LLP webinars are pre-approved. Please check the certification page to determine if other webinars are pre-approved or need to be submitted for approval to the NADOA Certification Committee. Contact the CDOA committee to obtain pre-approvals (cdoa@nadoa.org). Certification points should only be applied for after completing the event. If you are unable to attend an event due to unforeseen circumstances, it is an ethics violation to apply for the credit. NADOA – Webinar information and registration links will be posted on the website ( www.nadoa.org ). Webinars are free for NADOA members and $15.00 for non- members. NADOA members may use the following link to log in and register for upcoming webinars as well as listen to previously recorded webinars: https://nadoa.wildapricot.org/ page-1709226 or by using the Webinar link in the Members Only section on the homepage. Please send suggestions for NADOA webinar topics/

N at i onal A ssociation of D i v i s i on O rder A nalys t s

NADOA

Institute Educating in the Heart of America OKC

REGISTRATION Debbie McKee Co-Chair Valerie Wible Co-Chair Amanda Lynch Co-Chair Melanie Westbrook Co-Chair Iris Alcantara Co-Chair

Please reach out to me or Valerie Wible if you would like to help and we will make sure that happens this year. It is a great opportunity to meet the people you work with on the telephone all the time. You can reach me, Debbie McKee, at 405-570-9702 or dmckee52@gmail.com and Valerie Wible at 580-467-0497 or Valerie.wible@ mustangfuel.com . Registration will open on Wednesday, October 2. Valerie, Amanda and I all live in Oklahoma City, and we are really excited to be the Host City this year. There are so many new things to explore downtown and all-around town if you take extra time to see them. The Bombing Memorial is a must see and it is especially touching at night when all the chairs are lit up.

Registration will need a few volunteers this year. It is too early at this point to know exactly how many we will need, although we are always ready to hear from you if you want to help. We will know more after our first Institute meeting in February, and everything will be nailed down when we meet in June.

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2024 Institute Committee

COMMITTEE

COMMITTEE MEMBERS

COMMITTEE

COMMITTEE MEMBERS

IInstitute Coordinator

Luanne Johnson, CDOA

Packets - Goody Bags

Elisia McCall

Institute Coordinator

Jean Hinton

Packets - Goody Bags

Jason Charles

Hotel

Sonya Turner, CDOA

Publicity

Armando Lopez

Hotel

Lisa Buffaloe, CDOA

Exhibitors

Gordon Gallett

Hotel

Cheryl Hampton

Corporate Donations

Vicki Danielson, CDOA

Registration

Melanie Westbrook, CDOA

Corporate Donations

Melissa Fontana, CDOA

Registration

Amanda Lynch, CDOA

Corporate Donations

Mary Montoya

Registration

Iris Alcantara

Transportation

Jamie Meyer

Registration

Debbie McKee

Transportation

Michelle Harris-Fairclough, CDOA

Registration

Valerie Wible, CDOA

Information

Betty Davidson, CDOA

Program

Chase Howell

Information

Brenda Pirozzolo, CDOA

Program

Jennifer Beyer, CDOA

News Magazine

Rona Erickson, CDOA

Vendor Fair NADOA would like to welcome all vendors to this year’s 51st Vendor’s Fair! We hope you will join us this year in Oklahoma City, OK! Here’s a link to this year’s vendor registration form. https://nadoa.wildapricot.org/resources/Docu- ments/2024%20Institute/2024%20NADOA%20 VendorRegFormAgmt.pdf Please complete the form and email it to Chris Program Samantha Rodelo Speaker Packets/Volunteers Jackie Powell Speaker Packets/Volunteers Jennifer Broomfield Speaker Packets/Volunteers Kayla Simpson Speaker Packets/Volunteers Elizabeth Nordin Hospitality Joe Carpini Hospitality Elisa Evans Hospitality Lindsey Brown Publications, Signage & Temp Control

Door Prizes

Quint Withers, CDOA

Door Prizes

Michelle Davila

Golf Event

Melissa Fontana, CDOA

Golf Event

Allix Prather

Photography

Armando Lopez

Photography

Rona Erickson, CDOA

Tucker & Gordon Gallet so we can get you registered for the conference. If you have any questions, please contact Lewis Box or Gordon Gallet below.

Register to confirm your space now!! Gordon Gallet galletg78@gmail.com Cell: 337-258-5730 Lewis Box Lewis.box@gmail.com Cell: (325) 234-5741 Chris Tucker administrator@nadoa.org

N at i onal A ssociation of D i v i s i on O rder A nalys t s

NADOA 2024 ANNUAL EDUCATIONAL INSTITUTE OMNI Hotel – Oklahoma City, OK October 2-3, 2024

Link to Donation Form

SPONSOR DONATION FORM Thank you for your sponsorship. Your donations help with the cost of our speakers, hospitality functions, conference publications, including a compilation of our speakers’ presentations, as well as to cover general fund- administrative costs. We have attached suggested contribution levels. However, please keep in mind that these are suggestions – all contributions will be recognized. This financial support helps reduce the costs to all attendees and allows NADOA to present a professional, quality educational event . If you would like to apply your sponsorship to a specific category, you may indicate that preference below.

AMOUNT

CATEGORY

General Donation (includes administrative costs, door prizes, etc.) Education / Speaker Hospitality Functions Publications Golf Tournament

SPONSOR INFORMATION

Company Address

City, State, Zip Email Address Phone Number Contact Person

G rowth T hrough E ducat i on - J anuary / F ebruary / M arch 2024 To assure that your name will be published in the NADOA Institute Brochure, please return your donation, along with this form to NADOA no later than July 1, 2024. Corporate sponsorships received after this date will be published in subsequent publications. PLEASE RETURN THE FORM AND CONTRIBUTION TO: NADOA PO BOX 1656 Palm Harbor FL 34682 For questions , please contact: Vicki Danielson Melissa Fontana Corporate Donations Co-Chair Corporate Donations vdanielson@att.net Melissa@iberiamansys.com 713-417-7330 713-893-9274 11

Any individual/Corporation making a $5,000 donation by July 1, 2024 will receive 1 free registration for conference.

Any individual/Corporation making a $10,000 donation by July 1, 2024 will receive 3 free registrations for conference

Donation Categories

$10,000+

BLACK Gold

$5,000-$9999

FARM ON! Feeding the World

$3,500-$4999

Indian Spirit

$2000-$3499

Tornado Alley

$1000-$1999

Queen of Country

$500-$999

Cowboys/Boomer Sooner!

Up to $499

Rip Roaring Rodeo

N at i onal A ssociation of D i v i s i on O rder A nalys t s

INFORMATION

We are working closely with the “Oklahoma City Convention and Visitors Bureau” to gather Brochures, Inside Track Passes, Walking Maps and Discounts during NADOA’s stay in October. Come enjoy an educational experience coupled with History & Heritage, Nature & Outdoors, Arts & Culture, Museums, Dining, Family Activities, Nightlife & Casinos. Please join us October 2 – 4 at the Omni Oklahoma City, Oklahoma for the

NADOA 2024 Institute. Brenda Pirozzolo, CDOA Betty Davidson, CDOA

Trusted Legal Counsel to Energy Companies

Oil & Gas | Utilities | Mining | Renewables Steptoe & Johnson PLLC is a law firm with over 400 lawyers and other professionals across 18 offices serving all sectors of the energy industry

for more info visit steptoe-johnson.com

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400 White Oaks Boulevard, Bridgeport, WV 26330 THIS IS AN ADVERTISEMENT

Donate a Door Prize Donors will be featured at Institute & in the NADOA Newsmagazine

Michelle Davila michelle davila@pogresources.com

Quint Withers Quint@mcgowanwp.com

NADOA GOLF TOURNAMENT LINCOLN PARK GOLF COURSE 4001 NE GRAND OKLAHOMA CITY, OK 73111 October 2, 2024 1-5 pm All levels of play accepted Green fees/cart $55 Seniors 62+ $43 Club rentals $15 – basic $30 – Titleist/Callaway/Ping All golfers eligible for gift card drawings.

N at i onal A ssociation of D i v i s i on O rder A nalys t s

The Ellis Rudy Memorial Scholarship will be available this year for individuals looking for assistance to attend the 2024 Annual Institute in Oklahoma City, OK at the OMNI Hotel. This scholarship does not cover the full cost of Institute. It will cover registration. If you receive a scholarship, please be available to volunteer during the Institute. To apply, please complete and submit the below form by June 30, 2024 or contact Vicki Danielson for further information vdanielson@att.net

Name___________________________________________________ Email____________________________________________________

Phone_______________________________ Date________________________________

ELLIS RUDY MEMORIAL SCHOLARSHIP

What is the nature of your financial need? o Unemployment o No Company Support o Other _____________________ How many years have you worked in Division Orders? o 1-4 o 5-9 o 10-14 o 15+ What do you most want to get from Institute? o Education o Networking

o Leadership training through volunteering o Other ______________________________ Write a short paragraph on why you would be a good candidate for the scholarship: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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2024 NAPE by Vicki Danielson

I recently worked in the NADOA booth at NAPE. So many visitors came by inquiring about the NADOA organization. With the help of Betty Davidson, Kim Bowman, Riham Chahine and myself we were able to answer all their

questions. We had a drawing for a beautiful gift basket with bourbon, Cokes, cherries and the recipe for the adult version of the Roy Rogers Drink. By the way, Roy Rogers was married to Dale Evans in Oklahoma. The gift basket was won by Georgia McCuistion, Land Administration Director at CAMS. The winner was picked by a person from the Spindletop booth adjacent to NADOA’s. We were able to sign up several new members; a very productive two-day event.

Legal

Updates Articles are not intended to be and should not be relied upon as legal advice or to establish any kind of an attorney-client relationship with the author.

Drilling Restrictions in the Permian? Maybe so!

Texas

The City of Midland sought permission from the Railroad Commission of Texas (RCC) to challenge drilling permits in the Permian. The issue is not related to drilling oil, but rather, the disposal of wastewater from oil and gas production. Specifically, the city has challenged Pilot Water Solutions’ permits to inject wastewater near the T-Bar Ranch, where Midland gets roughly 30% of its drinking water. The city purchased the T-Bar Ranch in Winkler County in the mid-1960s for its future water needs. Midland also claims ownership to the groundwater under sections adjacent to the T-Bar Ranch. After the 2011 drought conditions almost hamstrung Midland and Odessa, the city of Midland opted to tap into the 20,229-acre T-Bar Ranch for its water supply.

next to the T-Bar Ranch, for a combined capacity up to 567 million gallons of produced water per month. In December 2022, Midland’s lawyers protested five of Pilot’s wells applications, which proposed to inject up to 24,900 barrels of produced water per day, per well, all within 1,000 feet of Midland’s water wells. The desire to continue profitable oil and gas operations in the oil capital of Texas, and the need for the city to provide fresh drinking water for its citizens are clearly in conflict here. For its part, Pilot proposed measures beyond those required by the RCC to protect the groundwater, including designing wells with three strings of steel casing, each protected by cement to the surface. Pilot also intends to install monitors at the wellhead to detect conditions and shutdown in the event of a leak. The City’s concern, of course, is that the additional measures offered by Pilot will

From June to November 2022, Pilot Water Solutions applied for permits to drill 18 disposal wells in the lands

N at i onal A ssociation of D i v i s i on O rder A nalys t s

CONTACT The Author

be insufficient, accidents will happen, and the groundwater will be contaminated.

If you have any questions regarding this case law update or suggestions for topics to be covered in future issues, please call our office at 713-229-0360 or contact:

The hearing before the Railroad Commission administrative judges occurred on January 8-11th, 2024. Will the RCC limit Pilot’s disposal in favor of protecting the drinking water, or allow Pilot to inject the wastewater with the additional protections in place? UPDATE as of 1/25/2024: We recently wrote about a dispute between the City of Midland and Pilot Water Solutions. Specifically, the City of Midland sought permission from the Railroad Commission to challenge drilling permits issued to Pilot Water Solutions to inject wastewater near a reservoir that provides roughly 30-35% of the City of Midland’s drinking water. Prior to the hearing before the Railroad Commission, the City of Midland and Pilot reached settlement, which allows Pilot to inject four saltwater disposal wells further away from the reservoir with the possibility of six to eight more with the city’s oversight. Additionally, Pilot is required to pay $400,000 for monitoring of the disposal wells, and ground water monitoring wells to check the reservoir’s water, which was the main push for the City of Midland. Finally, Pilot has agreed to pay for and plug two older wells that were leaking.

Molly Pela Partner, Houston

mpela@oglawyers.com www.oglawyers.com

Colorado Supreme Court Clarifies the Law Applicable to Oil and Gas Leases

Colorado

arguments that cessation of production clauses are triggered whenever production ceases from leased or pooled lands during the secondary term regardless of whether such cessation is temporary or permanent. The Colorado Supreme Court reversed. Rejecting application of any universal definition of the word “production” (such as the commercial discovery rule), the Supreme Court held that “each oil and gas lease” in Colorado should be interpreted “on its own terms” and the goal of parties and the courts should be to “determine the parties’ meaning within the context of the lease.”

The Colorado Supreme Court announced its long- awaited decision on the universal application of the “commercial discovery rule” to Colorado oil and gas leases on November 20, 2023. The announcement stems from Board of County Commissioners of Boulder County v. Crestone Peak Resources Operating LLC (2023 CO 58, 2023 Colo. LEXIS 1086, 538 P.3d 745, 2023 WL 8010221) . In 2021, a panel of the Colorado Court of Appeals held that an oil and gas lease in Colorado only terminates in its secondary term under a cessation of production clause if wells on leased or pooled lands are incapable of producing oil and gas in commercial quantities. The panel also rejected

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Among the many other important observations of the Supreme Court are the following:

provisions chosen by the parties; - Cessation of production clauses are savings clauses intended to extend, and not restrict, a lessee’s rights during the secondary term, and may or may not eliminate or avoid the operation of the common law temporary cessation doctrine; and - Shut-in royalty clauses are savings clauses that should be given meaning and not rendered superfluous through an interpretation of a cessation of production or other lease clauses. The full opinion of the court can be accessed here. For assistance or questions concerning the above, please contact the authors or any member of the Steptoe & Johnson Energy Team

- Oil and gas leases are different from other Colorado contracts because they are both a conveyance and a contract; - In Colorado, it is the intent of the original parties to an oil and gas lease that matters, and intent should ordinarily be gleaned from the language used in the lease as well as the expressed purpose of the lease and the terms and remedies chosen by the original parties; - The nature of the primary term of an oil and gas lease differs in many respects from that of the secondary term, and the standard for determining whether sufficient production has been achieved during the secondary term may differ as well; - To avoid unduly depriving lessees of their investment, courts should exercise greater caution when assessing and determining whether an oil and gas lease has terminated during its secondary term due to a cessation of production; - Although the commercial discovery rule may aptly reflect the intentions of the parties to some oil and gas leases, it is unnecessary and unwise to universally impose its definition of production in every oil and gas lease, regardless of the context and the other

Authors

Diana S. Prulhiere

David R. Little Member | Litigation (303) 389-4370 Click Here to Email

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The Suspense is Killing Me! – When Formal Notice May be Required Under North Dakota’s Suspense Statute

North Dakota

In Powell v. Statoil Oil & Gas LP , 1 the North Dakota Supreme Court found that failure to properly notify a suspended royalty owner of an alleged title defect may allow for statutory interest under North Dakota’s “Suspense Statute.” 2 This rule particularly applies when the title discrepancy is between a mineral owner and an operator, as opposed to a dispute between two competing

mineral or royalty owners. The court also held that the ten-year statute of limitations applies to unpaid, underpaid, and untimely royalty payments.

I. Background

June Slagle owned a life estate mineral interest in McKenzie County prior to her death

N at i onal A ssociation of D i v i s i on O rder A nalys t s [1] 2023 N.D. LEXIS 233; 2023 ND 235. Note that Lexis citations are used in this article. [2] N.D. Cent. Code § 47-16-39.1. Note that this Code section is sometimes generically referred to by practitioners as the North Dakota “Suspense Statute.” That portion of the Suspense Statute stating that “[t]his section does not apply . . . in the event of a dispute of title existing that would affect distribution of royalty payments, or if a mineral owner cannot be located after reasonable inquiry by the operator . . .” is sometimes referred to as the “Safe Harbor” provision. 18

on April 23, 2016 (the “Slagle Interest”). The remainder was owned by the June Slagle Family Mineral Trust (the “Slagle Trust”). In April 2010, Brigham Oil & Gas L.P., the predecessor in interest to Statoil Oil & Gas LP (n/k/a Equinor Energy LP) (hereinafter “Statoil”), took a lease from “Fonda Powell, power of attorney for June Slagle.” Importantly, a power of attorney naming Fonda Powell (June’s daughter) as attorney-in-fact for June Slagle was provided to Statoil but was never recorded in McKenzie County. 3 Statoil’s Patent Gate 7-6 #1H Well was spud in October 2011 and began producing in April 2012. However, June Slagle was never paid royalties during her lifetime. In April 2017, after June’s death, Statoil paid the Slagle Trust ~$750,000 for the suspended royalties attributable to June’s life estate mineral interest. 4 In May 2019, the Estate of June A. Slagle, Deceased and the June Slagle Family Mineral Trust (the “Plaintiffs”) filed suit, alleging that Statoil breached its obligation to timely pay royalties and seeking statutory interest. 5 Statoil countered that it had legitimately suspended the payments because, although a copy of the power attorney had been provided to Statoil, it had never been recorded in McKenzie County. However, Statoil had never contacted June or Fonda and informed them of this alleged title defect or that June’s life estate interest was being held in suspense. The district court found that the unrecorded power of attorney created a legitimate title dispute under the “Safe Harbor” provision of the Suspense Statute, and that Statoil thus did not owe statutory interest. The Plaintiffs appealed, 6 challenging (i) the applicable statute of limitations, and (ii) whether Statoil rightfully suspended the Slagle Interest due to a dispute of title.

disagreed, noting that the “Legislature is aware of the difference between ‘interest’ and ‘penalty,’ and although there may be an upper limit where interest becomes a penalty, we will not second- guess its use of the word ‘interest’ here.” 7 Section 28-01-15(2) of the Code imposes a ten- year statute of limitations on “a contract contained in any conveyance . . . affecting title to real property.” As previously held in 2016’s Kittleson v. Grynberg Petro. Co. , the ten-year statute of limitations applies to a breach of contract action for the underpayment of royalties 8 . In North Dakota, unlike some other states, the obligation to pay royalties is “of the essence” in an oil and gas lease and breaching the obligation can lead to lease cancellation. The obligation to pay royalties is thus a “contract in a conveyance affecting title to real property” and falls within the scope of Section 28- 01-15(2). 9 Under the Suspense Statute, the 18% interest is part of an unpaid royalty owner’s damages for the nonpayment and an alternative remedy to cancellation of the lease. 10 The basis of the grievance can be nonpayment, underpayment, or (as in Powell ) untimely payment of royalties. The Plaintiffs’ claim for untimely royalties and statutory interest accrued within ten years of bringing suit and was not barred by limitations, including the three-year statute. 11

III. Vic Christensen and the Safe Harbor Provision

As noted above, the Suspense Statute allows a mineral owner to charge 18% interest on untimely

[3] 2023 N.D. LEXIS 233, 2 (¶ 3). [4] Id. at 2-3 (¶ 4). [5] Id. at 3 (¶ 5). [6] Id. at 4 (¶ 6). [7] Id. at 7-9 (¶ 11). [8] 876 N.W.2d 443 (N.D. 2016). [9] Powell (at ¶ 12). [10] Id. at (¶ 13). [11] Id .

II. Kittleson and the Ten-Year Statute of Limitations

Section 28-01-17(2) of the North Dakota Century Code imposes a three-year statute of limitations on actions for a “penalty or forfeiture.” Statoil argued that the interest owed under the Suspense Statute is “not truly interest,” but a penalty and that the three-year statute should apply. The court

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royalty payments. However, the Statute does not apply in the event of a dispute of title affecting the distribution of royalty payments. This is sometimes referred to as the “Safe Harbor” provision. In 2022’s Vic Christensen Mineral Trust v. Enerplus Res. (USA) Corp. , an “erroneous” comment in a title opinion caused certain royalty payments to be placed in suspense. 12 The trusts sued each other to quiet title, but ultimately found that no issue existed and signed a stipulation of interest to clear title. The trusts then sued Enerplus Resources Corporation (“Enerplus”) for statutory interest, claiming that Enerplus had wrongfully placed their interest in suspense. The Vic Christensen court held that the Safe Harbor provision does not require a successful title claim, but merely an existing dispute of title. Otherwise, an operator would have to evaluate the legal merits of a dispute, a job best left to the courts. 13 In Vic Christensen , the “crucial facts” were that the operator notified the mineral owners of a title discrepancy, and thereafter the mineral owners sued each other. This “undoubtedly creat[ed] a ‘dispute of title’ that would affect their royalty payments from [the operator].” 14 Here, unlike Vic Christensen , there was no quiet title action or other disagreement between mineral owners. Under N.D. C ent . C ode § 47-16-39.4, “if the mineral owner and mineral developer disagree over the mineral owner’s ownership interest in a spacing unit, the mineral developer shall furnish the mineral owner with a description of the conflict and the proposed resolution or with that portion of the title opinion that concerns the disputed interest.” Unlike Enerplus in Vic Christensen , Statoil did not contact June Slagle providing a description of the disputed interest or advise her that it was suspending her royalties. 15 The Powell court declined to address whether failure to record a power of attorney in the county where the property is located qualifies as a title dispute under the Suspense Statute. Instead, because the dispute was between the mineral owner and the operator (as opposed to between mineral owners) notice of the dispute was required under N.D. C ent . C ode § 47-16-39.4. 16 Statoil did

not notify June Slagle of her title defect, and failed to pay royalties to June Slagle on her life estate interest during her lifetime. Thus, Statoil did not avail itself of the Safe Harbor provision and statutory interest was due and owing. 17

IV. Takeaways from Powell

Several noteworthy takeaways emerge from the Powell decision. First, Powell serves as a reminder that the obligation to pay royalties in North Dakota is a condition (not a covenant) under an oil and gas lease. Failure to pay royalties, underpayment of royalties, or untimely payment of royalties can result in lease forfeiture or, alternatively, the assessment of interest under the Suspense Statute. Second, the North Dakota Supreme Court declined in Powell to treat interest under the Suspense Statute as a penalty or forfeiture within the meaning of the three-year statute of limitations. Instead, the nonpayment, underpayment, or untimely payment of royalties falls within the purview of a contract contained in a conveyance affecting title to real property and the ten-year statute applies. Third, Powell highlights an important distinction regarding notice of a title dispute under the Safe Harbor provision if the dispute is between a mineral or royalty owner and a mineral developer. Construing N.D. C ent . C ode §§ 47-16- 39.1 and 47-16-39.4 together, if an operator fails to notify a mineral owner of a title dispute affecting her distribution of royalties and fails to pay royalties within 150 days after oil or gas produced under the lease is marketed, and cancellation of the lease is not sought, the operator will likely be obligated to pay the 18% per annum statutory interest under

[12] 969 N.W.2d 175 (N.D. 2022). [13] Id. (at ¶ 11). [14] Id. [15] Powell at ¶ 16. [16] Id. at ¶ 17. [17] Id.

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the Suspense Statute. This notice should include a description of the conflict and the proposed resolution or that portion of the title opinion that concerns the disputed interest.

the biggest takeaway in this arena is that if you are going to place a party in suspense – and the party can be located after reasonable inquiry – you should provide them with thorough and timely notice of their suspension and instructions on how to cure. Author:

V. Parting Thoughts on POAs

The court left open the question of whether failure to record a power of attorney in the county where the property is located is a dispute of title within the meaning of the Safe Harbor provision of the Suspense Statute. Although we are not aware of any binding authority on point, the North Dakota Title Standards state that a power of attorney must be recorded to establish authority of an attorney-in- fact on behalf of the principal. 18 Therefore, there is some support for the assertion that a missing power of attorney could be a suspendible offense (as long as proper notice is provided to the party in suspense). At the least, failure to record a power of attorney remains a strike against marketable title. Note that missing powers of attorney greater than 20 years old may be cured under the North Dakota Marketable Title Act, 19 or treated as an “ancient document” for evidentiary purposes. 20 In Powell , Statoil had been provided with an unrecorded copy of the Slagle/Powell power of attorney. It remains an open question as to whether this type of “actual notice” might take this somewhat technical title defect outside the protection of the Safe Harbor provision. Perhaps

Brad Gibbs Partner, Houston bgibbs@oglawyers.com Edited by Brad McCamy www.oglawyers.com

The content of this publication and any attachments are not intended to be and should not be relied upon as legal advice or to create a lawyer-client relationship. © 2024 Oliva Gibbs LLP. All rights reserved. This publication may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Houston (principal office): 815 Walker St., Suite 1140, Houston, Texas 77002 | Columbus: 580 North Fourth Street, Suite 260, Columbus Ohio 43215 | Lafayette: 4906 Ambassador Caffery Parkway, Building K, Lafayette, LA 70508 | Oklahoma City: 301 Lilac Drive, Suite 250, Edmond, OK 73034 | [18] N.D. Tit. Stand. § 2-11; see generally N.D. Cent. Code § 35-03-03. [19] N.D. Cent. Code Ch. 47-19.1. [20] N.D.R.Ev. 803(16).

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Lola Strickland Local Association Coordinator

CAPITAL ASSOCIATION OF PROFESSIONAL DIVISION ORDER ANALYSTS (CAPDOA) Association based in the Oklahoma City, OK Area

APPALACHIAN BASIN ASSOCIATION OF DIVISION ORDER ANALYSTS (ABADOA) Association Based in the Pittsburgh, Pennsylvania Area Serving NY, OH, PA, WV (Inactive)

………………………………… ARKLATEX ASSOCIATION OF DIVISION ORDER ANALYSTS (ALTDOA) Association based in the Shreveport, LA Area (Inactive) …………………………………

CAPDOA had a great 2023 and we are looking forward to the NADOA conference being in OKC in October of 2024! We will be available to help however we can to welcome you to our great city!

N at i onal A ssociation of D i v i s i on O rder A nalys t s

CAPDOA 2024 Board: President: Amy Lofgren, Citizen Energy III LLC Vice-President: Shemika Williams, Diamondback Energy Secretary: Rocheyl Warwick, Ascent Resources Treasurer: Esther Cardwell, CDOA, Chesapeake Energy Corp Director: Audrey Stachmus, PakEnergy Director: Jennifer White, Ascent Resources Director: Tiffany Scurra, Ascent Resources NADOA Director: Michelle Harris-Fairclough, CDOA, Energy Point Consulting LLC Board Advisor: Lola Strickland, Diversified Energy Coming up in 2024: Tuesday, February 20, 2023- Business Meeting -Capitol View Event Center Amanda Clark presenting “Solar Leasing and it’s Parallels to Traditional Oil & Gas Leases.” Tuesday, April 16, 2023 – Business Meeting-Capitol View Event Center Speaker/Topic-TBD

DALWORTH ASSOCIATION OF DIVISION ORDER ANALYSTS (DALWORTH) Association serving the Dallas/Fort Worth, TX Area

DALWORTH 2024 BOARD Kimberly Bowman, Finley Resources - President OPEN - 1st Vice President Katrina Villarreal, Dorchester Minerals - 2nd Vice President Christy Ewert, Resource Royalty - 3rd Vice President Sara Buck, Comstock Resources - Recording Secretary Eli Murray, Dorchester Minerals - Corresponding Secretary Somchay Fairbanks, Aethon Energy - Treasurer Gorden Gallet, Elk Range, Director - Compliance OPEN Director - House Katrina Villarreal, Dorchester Minerals, Director - Hospitality Somchay Fairbanks, Aethon Energy, Director - Hospitality Brenda Pirozzolo, Steptoe & Johnson Land Admin Services- Contract, Director - Historian Lewis Box, Riverbend Energy Group, Director - Scholarship Eli Murray, Dorchester Minerals - Board Advisor Brenda Pirozzolo, Steptoe & Johnson Land Admin Services- Contract - NADOA Liaison Kimberly Bowman – DALWORTH 2024 President’s Bio

Tuesday, June 18, 2023 – Seminar- Remington Park Speakers/Topics-TBD Tuesday August 20, 2023 – Business Meeting-Capitol View Event Center Speaker/Topic-TBD Tuesday October 22nd, 2023 – Business Meeting-Capitol View Event Center Speaker/Topic-TBD Tuesday December 12, 2023 – Christmas Meeting-Capitol View Event Center Speaker/Topic-TBD

For more information regarding CAPDOA, please visit our website at www.capdoa.org. …………………………………

Kimberly Bowman is a senior Division Order Analyst with Finley Resources in Fort Worth, Texas. She started her career at Chesapeake Energy’s Corporate office in Oklahoma City in February 1997 in the Division Order Department. In 2014 she relocated to Fort Worth, Texas. Prior to

working in Oil & Gas, she worked for the Express Employment Professionals corporate office in Oklahoma City. Kimberly’s been a member of OCAPL and CAPDOA in Oklahoma City, served various roles on the DALWORTH Board and was on the NADOA Board in 2019 and 2020 as DAWORTH Liaison. She is currently a Representative with Texas Energy Council for DALWORTH. Kimberly resides in Hudson Oaks, Texas with her husband Jeff Bowman, and has two grown children, Johnathan and Ashley Ginter of Yukon, Oklahoma. She enjoys spending time with family and landscaping their one acre of land. Also enjoy supercross motocross, sprint car racing, and traveling the

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