carried or has “gone nonconsent” in others. Note that this case addressed recovering risk penalties allocable to prior DSUs when they have been “dissolved” into a larger, unitized area covering a common source of supply. The court holds that risk penalties can be recovered on unitized (or pooled) lands at the unit level as opposed to the well level, regardless of when the penalties accrued. What is slightly less apparent is the effect this holding may have on overlapping lease line wells and units. Overlapping units occur when two or more prior DSUs are “combined” to allow for drilling in a lease line setback corridor, but the lands are not formally unitized. Overlapping pooling orders typically state that they do not reallocate production for wells producing on the underlying “base” units. The base unit wells remain committed to their base units, and the overlapping units typically contain a single lease line well (or occasionally two stacked lease-line laterals) that is committed to the new overlapping unit. It would thus appear that although risk penalties can be recovered from the collective wells on a DSU, it would be less likely that recovery could be made from a lease line well in an overlapping unit for prior penalties allocable to the base unit wells. This is because the Compulsory Pooling Statute allows recovery only from the actual “pooled spacing unit” of which the wells are a part.
NDIC, affording them even greater deference than they do other administrative agencies. This is generally because courts recognize the high degree of specialized and technical knowledge it takes to regulate oil and gas production.
The Author:
Brad Gibbs Partner and Co-owner, Oliva Gibbs
bgibbs@oglawyers.com 713/229-0360
Brad advises clients on due diligence, complex mineral titles, pooling issues, lease analysis, joint operating agreements, surface use issues, renewables, litigation, and other upstream matters. He earned his J.D. from the University of Houston Law Center and his B.S, cum laude, from Texas State University. He serves on the board of WHAPL and the HBA Energy Law Section. Brad is Board Certified in Oil, Gas, and Mineral Law by the Texas Board of Legal Specialization and has been recognized as a top-rated energy and natural resources lawyer in Houston since 2018. Education • J.D., University of Houston Law Center, University of Houston • B.S., Texas State University Bar Admissions
New Mexico North Dakota Texas
This case also underscores the level of consideration North Dakota courts give to the
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G rowth T hrough E ducat i on - A pr i l / M ay / J une 2025
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