Plans for Exploration and Development of the Proposed Unit Area. The Initial XXX includes plans to drill an exploration well in each of the two identified prospects, with the following requirements: Pioneer shall (1) complete drilling operations on the Hailstorm Well by June 1, 2006; (2) commit in writing to drill the Thunderhead Well by September 1, 2007; and 3) drill the Thunderhead Well to completion by June 1, 2008. The Initial XXX sets out a timely sequence of reservoir delineation activities that will facilitate the ultimate development and production of the reservoir, if oil or gas is discovered in commercial quantities. Completion of these exploration activities as scheduled will satisfy the performance standards and diligence requirements that DNR and Pioneer agreed to as a condition for approval of the Agreement. If Pioneer fails to drill the Hailstorm Well to completion by June 1, 2006, the NE Storms Unit will be in default, the Agreement will terminate, the WIOs shall surrender the lease acreage in the unit that is past its primary term, and pay the State $25,600 for ADL 389096 and $25,330 for ADL 389097. If Pioneer completes the Hailstorm Well as scheduled but fails to commit to drill the Thunderhead Well by September 1, 2007, ADLs 389096, 389097, 390492 and 390497 will contract out of the NE Storms Unit and the WIOs shall surrender the lease acreage in the unit that is past its primary term, and pay the State $51,200 for ADL 389096 and $50,660 for ADL 389097. If Pioneer completes the Hailstorm Well as scheduled and commits to drill the Thunderhead Well but fails to drill the Thunderhead Well to completion as scheduled, ADLs 389096, 389097, 390492 and 390497 will contract out of the NE Storms Unit, the WIOs shall surrender the lease acreage in the unit that is past its primary term, and the WIOs pay the State $76,800 for ADL 389096 and $75,990 for ADL 389097 by June 1, 2008. In this case, a new plan of exploration will be due August 1, 2008. If Pioneer drills both the Hailstorm and Thunderhead Xxxxx as scheduled, the term of the Initial XXX is extended another year and a new unit plan of exploration or a plan of development will be due by August 1, 2009. These provisions ensure that the lease extensions resulting from unitization under 11 AAC 83.336(a)(2) continue only so long as Pioneer proceeds diligently with exploration and development. Pioneer shall report annually on its progress under the plan, and submit another unit plan, for further exploration or development of the unit area, at least 90 days bef...
Plans for Exploration and Development of the Proposed Unit Area. The Initial XXX sets out a timely sequence of reservoir delineation activities that should facilitate the ultimate development and production of the reservoir, if oil or gas is discovered in commercial quantities. Completion of these conditions and exploration activities as scheduled will satisfy the performance standards and diligence requirements that the Division and Xxxxxx Range agreed to as a condition for approval of the Agreement. The Initial XXX includes plans to develop the unit’s Kuparuk prospect based on seismic amplitude anomalies indicated by the 2000 Resolution 3D survey, and to drill an exploration well in the identified prospect, under the following conditions: Xxxxxx Range shall (1) by November 1, 2006, provide its seismic interpretation of the Resolution 3D data to the Division and re-define the extent of the Whiskey Gulch Unit Area; (2) by November 1, 2006, commit, in writing, to drill a Whiskey Gulch Unit well by June 1, 2007; and 3) drill the first unit well to completion by June 1, 2007. If Xxxxxx Range fails to provide its interpretation of the Resolution 3D data to the Division or make the well drilling commitment by November 1, 2006, the Whiskey Gulch Unit will be in default, the Agreement will automatically terminate on November 1, 2006. If Xxxxxx Range timely files the seismic interpretation and commits to drill the first unit well, but fails to drill the well to completion by June 1, 2007, then the Whiskey Gulch Unit will be in default, the Agreement will automatically terminate on June 1, 2007, and Xxxxxx Range shall make a payment of Two Hundred Thirty-four Thousand One Hundred Nineteen Dollars ($234,119.00), to and as directed by, the Division. If Xxxxxx Range drills the well by June 1, 2007, a new unit plan of exploration or a plan of development will be due by September 15, 2007. These provisions ensure that the lease extensions resulting from unitization under 11 AAC 83.336(a)(2) continue only so long as Xxxxxx Range proceeds diligently with exploration and development. Xxxxxx Range has agreed to waive the extension provisions of 11 AAC 83.140 and Article 15.2 of the Agreement, and the notice and hearing provisions of 11 AAC 83.374 applicable to default and termination or any contraction of the Whiskey Gulch Unit. Xxxxxx Range’s Initial XXX allows for earlier exploration and confirmation of the prospect in the Whiskey Gulch Unit area than would occur under the individual leases.
