For purposes of this part, unless otherwise required by their context, the following definitions apply:

1. (1) "Completion" or "completed" means the act of making a well capable of producing gas;
2. (2) "Conventional gas well" means any gas well that is not classified by the Director of the Oil and Gas Commission as a high-cost gas well;
3. (3) "Date of first production", when used in reference to a particular gas well, means the first day in the month that the gas well produces natural gas for sale;
4. (4) "High-cost gas well" means any gas well that is completed as a well capable of producing high-cost gas;
5. (5) "Marginal gas well" means any gas well that produces or is capable of producing marginal gas, as determined by the Director of the Oil and Gas Commission using the current wellhead deliverability rate methodology utilized by the Oil and Gas Commission;
6. (6) "Market value" means the producer's actual cash receipts from the sale of natural gas to the first purchaser less the actual costs to the producer of dehydrating, treating, compressing, and delivering the gas to the first purchaser;
7. (7) "New discovery gas well" means any conventional gas well that is completed as a well capable of producing gas;

8. (8)

   1. (A) "Payout" means the date the cumulative working interest revenues from a high-cost gas well equal the sum of all reasonable and necessary:

      1. (i) Drilling and completion costs incurred in connection with the high-cost gas well; and
      2. (ii) Operating costs incurred or accrued in connection with the operation of the high-cost gas well during the period of cost recovery.

   2. (B) In calculating allowable "payout", the following definitions shall apply:

      1. (i) "Drilling and completion costs" means all reasonable and necessary drilling and completion costs incurred and paid by the cumulative working interests in connection with the high-cost gas well; and
      2. (ii) "Operating costs" means all reasonable and necessary operating costs incurred or accrued by the cumulative working interests during the period of cost recovery.

   3. (C) In calculating allowable "payout", drilling, completion, and operating costs shall not include:

      1. (i) Lease acquisition costs;
      2. (ii) Tank batteries;
      3. (iii) Meters;
      4. (iv) Pipelines; or
      5. (v) Any other surface equipment except the wellhead equipment and separator;

9. (9)

   1. (A) "Producer" means any person, firm, receiver, or other fiduciary, corporation, or association, who or which engages in the business of severing natural gas.

   2. (B) For purposes of this part, any person, firm, receiver, or other fiduciary, corporation, or association that elects to take in-kind and separately sell its share of the natural gas produced from a well shall be deemed to be:

      1. (i) A "producer"; and
      2. (ii) Engaged in the business of severing natural gas with respect to such share of natural gas production;
10. (10) "Purchaser" means any person, firm, receiver, or other fiduciary, corporation, association, consignor, agent, or other dealer, by whatever name called, who or which acquires title outright or conditionally to any interest in severed natural gas;
11. (11) "Secretary" means the Secretary of the Department of Finance and Administration or any of his or her duly appointed deputies or agents;

12. (12)

    1. (A) "Sever", "severed", or "severing" mean natural gas taken or removed for commercial purposes from the soil or water.
    2. (B) However, "sever", "severed", or "severing" as defined in this part do not apply to any natural gas returned to any formation, in recycling, repressuring, pressure maintenance operation, or other operation, for the production of oil or any other liquid hydrocarbon.
    3. (C) Further, "sever", "severed", or "severing" as defined in this part do not apply to any hydrocarbons in gaseous or liquid form which are burned, used, consumed, or otherwise employed in oil and gas operations including but not limited to, secondary recovery operations and fuel for engines in the same leasehold, drilling, or production unit, or unit area of a unitized reservoir from which such hydrocarbons are produced.

13. (13) "Tight gas formation" means any natural gas-bearing formation that:

    1. (A) Has previously been determined by Oil and Gas Commission orders or field rules to be a low permeability formation, including:

       1. (i) Booneville and Chismville-OR# 84-2003-07;
       2. (ii) Gragg-OR# 89-2004-07;
       3. (iii) Waveland-OR# 86-2007-07;
       4. (iv) Rich Mountain-OR# 304-2006-09;
       5. (v) Mansfield-OR# 28-2003-03; and
       6. (vi) Witcherville and Excelsior-OR# 103-2005-07;
    2. (B) Is determined by the Director of the Oil and Gas Commission to have an estimated in situ permeability of one-tenth millidarcy (0.1 mD) or less; or
    3. (C) Is determined to be a tight gas formation by field rules, general rules, or orders issued by the Director of the Oil and Gas Commission;
14. (14) "Transporter" means any person, firm, receiver, or other fiduciary, corporation, or association who or which transports severed natural gas to any point within, across, or out of the State of Arkansas; and
15. (15) "Well" means a hole or shaft dug or drilled to obtain natural gas and includes production from all zones and multilateral branches without regard to whether the production is separately metered.

Codification Notes: This section as promulgated prior to codification into the Code of Arkansas Rules provided as follows: "Source: Ark. Code Ann. § 26-58-101."