AG-29 Shared Well Pad Cost Allocations

This publication discusses the types of costs associated with well pads that are shared by multiple wells and the concepts that should be considered when allocating those costs. The narrative includes the impact of the 24-month adjustment period, as well as aids in determining which costs should be shared with all wells or subset of wells on the pad vs. costs that are well specific and should not be shared. Allocation examples are provided to illustrate the application of the concepts discussed. 14 pages.  2013.

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Table of Contents

  1. INTRODUCTION
  2. PRIMARY CONCEPTS
    1. Cost Categories
    2. Fair, Equitable and Consistent
    3. Obligation for Well’s Portion of Shared Well Pad Costs
    4. Timing of Cost Allocation
    5. Advanced Planning and Authorization
  3. COSTS TO CONSIDER
    1. Location and Reclamation
    2. Damages and Right-of-Way
    3. Mud and Flowback Disposal
    4. Rig Moves
    5. Roads
    6. Flowlines and Electrical Lines
    7. Production Equipment
  4. OTHER ITEMS TO CONSIDER
    1. Infrastructure Serving Multiple Pads
    2. Title
    3. Temporarily Shut-In Operations on Existing Wells
    4. Wellbore vs. Well Completions
    5. Dry Hole, Shut-In and Temporarily Abandoned Wells
    6. Abandonment of Pad
    7. Audits
  5. EXAMPLES OF LOCATION COST ALLOCATIONS
  6. GLOSSARY
  7. Exhibit A: Shared Well Pad Cost Allocations
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