                                 CODE OF VIRGINIA

 POOLING OF INTERESTS IN DRILLING UNITS (§ 45.2-1620)

A. The Board, upon application from any gas or oil owner, shall enter an order
pooling all interests in a drilling unit for the development and operation
thereof when:

   1. Two or more separately owned tracts are embraced in a drilling unit;

   2. There are separately owned interests in all or part of any such drilling
   unit and those owners having interests have not agreed to pool their
   interests; or

   3. There are separately owned tracts embraced within the minimum statewide
   spacing requirements prescribed in &#xA7; 45.2-1616.
   				However, no pooling order shall be entered until the notice and hearing
   requirements of this article have been satisfied.

B. Subject to any contrary provision contained in a gas or oil lease regarding
the property, gas or oil operations incident to the drilling of a well on any
portion of a unit covered by a pooling order shall be deemed to be the conduct
of such operations on each tract in the unit. The portion of production
allocated to any tract covered by a pooling order shall be in the same
proportion as the acreage of that tract bears to the total acreage of the unit.

C. Every pooling order entered by the Board pursuant to the provisions of this
section shall:

   1. Authorize the drilling and operation of a well, including the stimulation
   of all coal seams in the case of a coalbed methane well when authorized
   pursuant to clause (iii) of subdivision F 2 b of &#xA7; 45.2-1631, subject to
   the permit provisions contained in Article 3 (&#xA7; 45.2-1629 et seq.);

   2. Include the time and date when such order expires;

   3. Designate the gas or oil owner who is authorized to drill and operate the
   well. Except in the case of a coalbed methane gas well, such designated
   operator shall possess the right to conduct operations or possess the written
   consent of owners with the right to conduct operations on at least 25 percent
   of the acreage included in the unit;

   4. Prescribe the conditions under which a gas or oil owner may become a
   participating operator or exercise a right of election under subdivision 7;

   5. Establish the sharing of all reasonable costs, including a reasonable
   supervision fee, between participating operators so that each participating
   operator pays the same percentage of such costs as his acreage bears to the
   total unit acreage;

   6. Require that any nonleasing gas or oil owner be provided with reasonable
   access to unit records submitted to the Director or Inspector;

   7. Establish a procedure for a gas or oil owner who received notice of the
   hearing but does not decide to become a participating operator to elect to (i)
   sell or lease his gas or oil ownership to a participating operator, (ii) enter
   into a voluntary agreement to share in the operation of the well at a rate of
   payment mutually agreed to by the gas or oil owner and the gas or oil operator
   authorized to drill the well, or (iii) share in the operation of the well as a
   nonparticipating operator on a carried basis after the proceeds allocable to
   his share equal the following:
   				a. In the case of a leased tract, 300 percent of the share of such costs
   allocable to his interest; or
   				b. In the case of an unleased tract, 200 percent of the share of such
   costs allocable to his interest.

D. Any gas or oil owner whose identity and location remain unknown at the
conclusion of a hearing concerning the establishment of a pooling order for
which public notice was given shall be deemed to have elected to lease his
interest to the gas or oil operator at a rate to be established by the Board.
The Board shall cause to be established an escrow account into which the unknown
lessor&#8217;s share of proceeds shall be paid and held for his benefit. Such
escrowed proceeds shall be deemed to be unclaimed property and shall be disposed
of pursuant to the provisions of the Virginia Disposition of Unclaimed Property
Act (&#xA7; 55.1-2500 et seq.). Upon discovery of the identity and location of
any unknown owner of an interest that is subject to escrow under the provisions
of this subsection and is not subject to conflicting claims of ownership, the
designated operator shall, within 30 days, file with the Board a petition for
disbursement of funds to be considered at the next available hearing. The
petition shall include a detailed accounting of all funds deposited in escrow
that are subject to the proposed disbursement.

E. Any person who does not make an election under the pooling order shall be
deemed to have leased his gas or oil interest to the gas or oil well operator as
the pooling order provides.

F. If a gas or oil owner is a person under a disability, the applicant for a
pooling order may petition the appropriate circuit court to appoint a guardian
ad litem pursuant to the provisions of &#xA7; 8.01-261 for purposes of making
the election provided for by this section.

G. Any royalty or overriding royalty reserved in any lease that is deducted from
a nonparticipating operator&#8217;s share of production shall not be subject to
charges for operating costs but shall be separately calculated and paid to the
royalty owner.

H. The Board shall resolve all disputes arising among gas or oil operators
regarding the amount and reasonableness of well operation costs. The Board
shall, by regulation, establish allowable types of costs that may be shared in
pooled gas or oil operations.

HISTORY: 1982, c. 347, § 45.1-302; 1987, c. 452; 1989, c. 529; 1990, c. 92, §
45.1-361.21; 1995, c. 269; 1996, c. 854; 2006, c. 498; 2021, Sp. Sess. I, c.
387.