1. (a) “Affiliate” means (1) any person directly or indirectly controlling, controlled by or under common control with another person, (2) a person owning or controlling 10% or more of the outstanding voting securities of such other person, (3) any officer or director of such other person and (4) if such other person is an officer or director, any company for which such person acts in any such capacity.
2. (b) “Area of Interest” means a geologically described region in which a program intends to conduct its oil and gas exploration activities. The area of interest of a program shall not include less than all of any known producing geologic structure, or oil or gas field which is contained in the description of such area of interest, except that if good case is shown, the Commissioner may allow an area of interest to exclude any lands adjacent thereto which are within an inland body of water or the coastal waters of the United States or any state.
3. (c) “Assessment” means any additional amounts of capital which a participant may be called upon to furnish, voluntarily or mandatorily, beyond his subscription.
4. (d) “Capital Contribution” means the total investment, including the original investment, assessments and reinvested amounts, in a program by a participant or by all participants, as the case may be.
5. (e) “Cost,” when used with respect to property in Section 260.140.127.1, means (1) the sum of the prices paid by the seller for such property; (2) title insurance or examination costs, brokers' commissions, filing fees, recording costs, transfer taxes, if any, and like charges in connection with the acquisition of such property; and (3) bonuses, rentals and ad valorem taxes paid by the seller with respect to such property to the date of its transfer to the buyer, interest on funds used to acquire or maintain such property, and such portion of the seller's expenses for geological, geophysical, seismic, land engineering, drafting, accounting, legal and other like services allocated to the property in accordance with generally accepted accounting principles, except for expenses in connection with the drilling of wells which are not producers of sufficient quantities of oil or gas to make commercially reasonable their continued operations, and provided that such expenses shall have been incurred not more than 36 months prior to the purchase by the program. When used with respect to services, “cost” means the expense incurred by the seller in providing such services, determined in accordance with generally accepted accounting principles. As used elsewhere, “cost” means the price paid by the seller in an arm's-length transaction.
6. (f) “Net Worth” means the excess of total assets over total liabilities as determined in accordance with generally accepted accounting principles.
7. (g) “Oil and Gas Interest” means any oil or gas royalty or lease, or fractional interest therein, or certificate of interest or participation or investment contract relative to such royalties, leases or fractional interests, or any other interest or right which permits the exploration of, drilling for, or production of oil and gas or other related hydrocarbons or the receipt of such production or the proceeds thereof.
8. (h) “Overriding Royalty” means an interest severed out of the lessee's working interest entitling its owner to a fraction of production free of the expense of production.
9. (i) “Participant” means the holder of a unit.
10. (j) “Partnership Agreement” means the limited partnership agreement of a program.
11. (k) “Program” means a limited or general partnership, joint venture, unincorporated association or similar organization, formed, or to be formed, for the primary purpose of exploring for oil, gas and other hydrocarbon substances or investing in or holding any interests which permit the exploration for or production of oil or gas or the receipt of such production or the proceeds thereof.
12. (l) “Prospect” of a program means an area in which such program owns or intends to own one or more oil and gas interests, which is geographically defined on the basis of geological data by the sponsor of such program and which is reasonably anticipated by the sponsor to contain at least one reservoir. Such area shall be enlarged or contracted on the basis of geological data to define the productive limits of such reservoir and must include all of the territory encompassed by any such reservoir.
13. (m) “Prospectus” shall have the meaning given to that term by Section 2(10) of the Securities Act of 1933, as amended, including a preliminary prospectus; provided, however, that such term as used herein shall also include an offering circular as described in Rule 256 of the General Rules and Regulations under the Securities Act of 1933, as amended, or, in the case of an intra-state offering, any document by whatever name known, utilized for the purpose of offering and selling units.
14. (n) “Reservoir” means a separate structural or stratigraphic trap containing an accumulation of oil or gas.
15. (o) “Sponsor” means any person directly or indirectly instrumental in organizing a program or any person who will manage or participate in the management of a program, including the general partner(s) and any other person who, pursuant to a contract with the program, regularly performs or selects the person who performs 25% or more of the exploratory, developmental or producing activities of the program, or segment thereof. “Sponsor” does not include wholly independent third parties such as attorneys, accountants, and underwriters whose only compensation is for professional services rendered in connection with the offering of units.
16. (p) “Subscription” means the original committed investment (excluding assessments) to a program by a participant upon its formation.
17. (q) “Tangible Costs” means those costs which are generally accepted as capital expenditures pursuant to the provisions of the Internal Revenue Code.
18. (r) “Unit” means an interest in a program.
19. (s) “Working Interest” means the operating interest under an oil and gas interest which carries with it the obligation to bear a proportionate share of all costs thereon.

The following definitions are applicable to this subarticle.

Note: Authority cited: Section 25610, Corporations Code. Reference: Section 25140, Corporations Code.

History

1. Editorial correction adding Note filed 11-8-82 (Register 82, No. 46).