Coutret and Associates, Inc.

Unitization

Reservoir-wide units are an important way to allow prudent exploitation of a reservoir and fair allocation income and expenses. Lease-based development many times is not economically efficient. More wells than are needed might be drilled. Competition between leases could cause damage to reservoirs by depleting reservoir energy. Most improved recovery operations are not practical or economically viable on a lease basis.

Most states provide for reservoir units where production from the entire reservoir is allocated to leases or tracts based on a fair and equitable formula. Thus, tracts which do not have wells can receive payment for minerals recovered from those tracts. The number of wells that are needed may be reduced. Tracts in portions of a reservoir that should not be produced from a reservoir recovery standpoint, such as tracts overlying gas caps, do not have to be developed. Without units, improved recovery operations would not be possible in most cases because of development and drainage issues.

Coutret and Associates, Inc. has been retained to represent clients in about twenty-five reservoir-wide unitizations in Louisiana, Arkansas, Texas, Mississippi, and Alabama.