Procedure for Taking Over an Orphan Well
Definition of Orphan WellOrphaned wells are inactive, non-compliant wells that have been inactive a minimum of 12 months and the responsible operator's Organizational Report (Form P-5) has been delinquent for greater than 12 months. Operators desiring to take over these wells must have an active Organization Report and, upon request, provide a good faith claim to operate the wells.
Requirements For Taking Over an Orphan Well
- The acquiring operator must have an Active P-5.
- The acquiring operator cannot have outstanding final orders ("639").
- The acquiring operator must be a "bonded operator" (Opt 1 or 2 financial assurance in the form of a performance bond, letter of credit, or cash deposit).
- The acquiring operator must have sufficient financial assurance to cover the acquisition, along with all currently operated wells.
- Any Form P-4, Producer's Transportation Authority and Certificate of Compliance holds placed on the well(s) by the Commission for non-compliance must be addressed with the appropriate Commission section (Field Operations, Enforcement or Well Plugging) prior to the transfer.
- The acquiring operator must have (and may be required to provide proof of) a good-faith claim to operate the well(s).
- The appropriate forms to transfer the well(s) to the acquiring operator must be filed with and approved by the Commission.
- Two signature Form P-4s - When the current delinquent operator’s signature can be obtained, a Form P-4 with signatures of the current operator and the acquiring operator may be filed.
- Single signature Form P-4s - When a signature cannot be obtained from the current delinquent operator, a Form P-4 may be filed with only the acquiring operator’s signature, but the acquiring operator must also provide a letter explaining why the prior operator has not signed (e.g., he cannot be found after a diligent search or he refuses to sign) and documentation establishing that the acquiring operator has at least a good-faith claim to the right to operate the wells(s).
- Oil lease subdivision - If the acquiring operator is only taking over certain oil wells on an existing lease and not the entire oil lease, in addition Form P-4 filing requirements, the acquiring operator must file a Form P-6, Request for Permission to Consolidate/Subdivide Leases, before and after plats outlining the configuration of the lease, and a statement that no overproduction exists on the lease.
- Good faith claim to operate - For all single signature Form P-4s and for other Form P-4 transfers when requested by the Commission, proof of good faith claim to operate the wells must be filed with the Commission.
Plugging & Compliance ResponsibilityAny operator who successfully acquires an orphaned well, acknowledges responsibility for the regulatory compliance of the wells they are acquiring and for the proper plugging of the well(s) pursuant to 16 Texas Administrative Code §3.14 (Statewide Rule 14) through their signature on the Form P-4. Additionally, the acquiring operator assumes responsibility for the physical operation and control of the wells, and acknowledges that they will remain designated as the responsible operator of record until a new operator designation is approved by the Commission.
Contact InformationFor questions related to:
Form P-5 or Financial Assurance contact the P-5 Section at 512-463-6772
Form P-4 or Form P-6 Subdivisions contact the Proration Section at 512-463-6975
Good Faith Claim to Operate Requirement contact the Office of General Counsel at 512-463-6848
SB639 Holds or Enforcement Holds contact the Enforcement Section at 512-463-6762
Field Operations, State Plugging Holds or Orphan Well List contact the Field Operations Section at 512-463-6830
Last Updated: 10/26/2017 10:57:44 AM