R 324.1206 Final decision or order.

Rule 1206. (1) The supervisor shall issue a final decision or order as a result of a hearing held under R 324.1205 or as a result of the procedure pursuant to R 324.1205(1)(c) after giving due consideration to all of the following: (a) The record. (b) The supervisor's experience, technical competence, and specialized knowledge. (c) The proposal for decision, if one is issued, and exceptions to the proposal for decision, replies to exceptions, and, if permitted by the supervisor, oral arguments and briefs. (d) The advice or recommendations of the representative of the supervisor when required or appropriate. (e) The stipulations or agreements that the contesting parties have placed on the record at a hearing or submitted in writing to the supervisor or the hearings officer. (f) The act and rules. (2) The final written decision or order of the supervisor shall be furnished to the petitioner. The petitioner shall serve copies, by first-class mail, to all persons who were mailed a notice of the hearing, who filed an appearance at the hearing, or who otherwise requested a copy of the final written decision. (3) When a hearing is scheduled at the initiative of the supervisor, the supervisor shall serve copies of the final written decision or order, by first-class mail, to all persons who filed an answer, who filed an appearance at the hearing, or who otherwise requested a copy. (4) After the hearing on a petition for an order to pool and after thorough consideration of the evidence and testimony submitted, the supervisor shall either rule that pooling is not necessary to prevent waste or shall enter an order pooling the separately owned tracts and interests within the drilling unit. The pooling order shall authorize 1 of the owners within the affected unit to drill and operate the well within the affected unit and provide that the well shall be commenced within 90 days if drilling of the well has not already commenced, unless otherwise specified in the pooling order. The pooling order is null and void as to all parties and interests with respect to any well that has not commenced within 90 days after the date of the order. The order shall set forth the terms and conditions under which each of the owners may share in the working interest ownership of the well drilled or to be drilled on the pooled unit and for the sharing of any production from the well. The order shall provide for conditions under which each mineral or working interest owner who has not voluntarily agreed to pool all of the owner's mineral or working interest in the pooled unit may share in the working interest share of production or be compensated for the owner's working interest within the pooled unit according to either of the following provisions: (a) Pay to the party authorized to drill, or who has drilled, the well that owner's proportionate share of the actual cost of drilling, completing, equipping, and operating the well in the pooled unit that the owner elects to participate in, or give bond for the payment of the share of the costs that have been, or are subsequently, actually incurred, whether the well is drilled as a producer or a dry hole. (b) As to each well that the owner does not elect to participate in as provided in subdivision (a) of this subrule, if the well has been, or is subsequently, completed as a producer, authorize the operator of the well to take out of the nonparticipatory interest's share of production from the well the party's share of the cost of drilling, completing, equipping, and operating the well, plus an additional percentage of the costs that the supervisor considers appropriate compensation for the risks associated with drilling a dry hole and the mechanical and engineering risks associated with the completion and equipping of each well. (5) Each nonparticipating owner who has not elected to participate in the drilling of any well by agreeing to pay the owner's working interest share of the costs shall make an election, within 10 days of receipt by the owner of the supervisor's certified mail copy of the order, as to which alternative in subrule (4)(a) or (b) of this rule the owner will select. If the nonparticipating party does not notify the supervisor in writing within 10 days of the owner's election as to any well proposed for the pooled unit, then the owner shall be considered to have elected the alternative in subrule (4)(b) of this rule. For the type of statutory pooling order specified in this rule, the owner of an unleased mineral interest shall be treated as a working interest owner to the extent of 100% of the interest owned in the pooled unit. Each nonparticipating owner shall be considered to be subject to a 1/8 royalty interest, which shall be free of any withholding for payment of any costs of drilling, completing, equipping, or operating the well to be drilled. All operations, including, the commencement, drilling, completing, equipping, or operation of a well, upon a portion of a drilling unit for which pooling has been ordered shall be considered for all purposes to be the conducting of operations upon each separately owned tract in the drilling unit. The portion of the production allocated to a separately owned tract or separately owned interest included in a drilling unit shall, when produced, be considered for all purposes to have been actually produced from the separately owned tract or tracts by a well drilled in the drilling unit.