1. (a) An operator may pool acreage, in accordance with appropriate contractual authority and applicable field rules, for the purpose of creating a drilling unit or proration unit by filing an original certified plat delineating the pooled unit and a Certificate of Pooling Authority, Form P-12, according to the following requirements:

   1. (1) Each tract in the certified plat shall be identified with an outline and a tract identifier that corresponds to the tract identifier listed on Form P-12.

   2. (2) The operator shall provide information on Form P-12, accurately and according to the instructions on the form.

      1. (A) The operator shall separately list each tract committed to the pooled unit by authority granted to the operator.
      2. (B) For each tract listed on Form P-12, the operator shall state the number of acres contained within the tract. The operator shall indicate by checking the appropriate box on Form P-12 if, within an individual tract, there exists a non-pooled and/or unleased interest.
      3. (C) The operator shall state on Form P-12 the total number of acres in the pooled unit. The total number of acres in the pooled unit shall equal the sum of all acres in each individual tract listed. The total acreage shown on Form P-12 shall only include tracts in which the operator holds a leased or ownership interest in the minerals or other contractual authority to include the tract in the pooled unit.
      4. (D) If a pooled unit contains more tracts than can be listed on a single Form P-12, the operator shall file as many additional Forms P-12 as necessary to list each pooled tract individually. The additional Forms P-12 shall be numbered in sequence.
      5. (E) The operator shall provide the requested identification and contact information on Form P-12.
      6. (F) The operator shall certify the information on Form P-12 by signing and dating the form.
   3. (3) Failure to timely file the required information on the certified plat or Form P-12 may result in the dismissal of the W-1 application. "Timely" means within three months of the Commission notifying the operator of the need for additional information on the certified plat and/or Form P-12.

   4. (4) The operator shall file Form P-12 and a certified plat in the following instances:

      1. (A) with the drilling permit application when two or more tracts are joined to form a pooled unit for Commission purposes;
      2. (B) with the initial completion report if any information reported on Form P-12 has changed since the filing of the drilling permit application;
      3. (C) to designate a pooled unit formed after a completion report has been filed; or
      4. (D) to designate a change in a pooled unit previously recognized by the Commission. The operator shall file any changes to a pooled unit in accordance with the requirements of §3.38(d)(3) of this title (relating to Well Densities).
2. (b) If a tract to be pooled has an outstanding interest for which pooling authority does not exist, the tract may be assigned to a unit where authority exists in the remaining undivided interest, provided, that total gross acreage in the tract is included for allocation purposes, and the certificate filed with the Commission shows that a certain undivided interest is outstanding in the tract. The Commission may not allow an operator to assign only the operator's undivided interest out of a basic tract, where a nonpooled interest exists.
3. (c) The nonpooled undivided interest holder retains the development rights in the basic tract. If the development rights are exercised, the Commission grants authority to develop the basic tract, and the well is completed as a producing well on the basic tract, then the entire interest in the basic tract and any interest pooled with another tract shall be assigned to the well on the basic tract for allocation purposes. Splitting of an undivided interest in a basic tract between two or more wells on two or more tracts is not acceptable.

4. (d) Except as provided in subsection (e) of this section, acreage assigned to a well for drilling and development, or for allocation of allowable, shall not be assigned to any other well or wells completed or projected to be completed in the same field; such duplicate assignment of acreage is not acceptable. However, this limitation shall not prevent the reformation of development or proration units so long as:

   1. (1) no duplicate assignment of acreage occurs; and
   2. (2) such reformation does not violate other conservation regulations.

5. (e) In unconventional fracture treated (UFT) fields defined in §3.86 of this title (relating to Horizontal Drainhole Wells), duplicate assignment of acreage to both a horizontal well and a vertical well for drilling and development or for allocation of allowable is permissible as follows:

   1. (1) The field density rules apply independently to horizontal wells and vertical wells. Acreage assigned to horizontal wells shall not count against acreage assigned to vertical wells, and acreage assigned to vertical wells shall not count against acreage assigned to horizontal wells.
   2. (2) Acreage assigned to horizontal wells for drilling and development, or for allocation of allowable, shall be acceptable so long as the horizontal well density complies with §3.38 of this title and/or special field rules, as applicable.
   3. (3) Acreage assigned to vertical wells for drilling and development, or for allocation of allowable, shall be acceptable so long as the vertical well density complies with §3.38 of this title and/or special field rules, as applicable.
   4. (4) For the purposes of this section, stacked lateral wells as defined in §3.86(a)(10) of this title are not considered duplicate assignment of acreage to multiple horizontal wells.
6. (f) If an offset, overlying, or underlying operator, or a lessee or unleased mineral interest owner determines that any operator has assigned identical acreage to two or more concurrently producing wells in violation of this section, the operator or owner may file a complaint with the Hearings Division to request that a hearing be set to consider the issues raised in the complaint. If the Commission determines after a hearing on the complaint that acreage has been assigned in violation of this section, the Commission may curtail or cancel the allowable production rate for any affected wells and/or may cancel the Certificate of Compliance (Form P-4) for any affected wells for failure to comply with this section.
7. (g) An operator shall file Form P-16, Acreage Designation, with each drilling permit application and with each completion report for horizontal wells in any field and for all wells in designated UFT fields as defined in §3.86 of this title. The operator may file Form P-16 with each drilling permit application and with each completion report for all other wells. The operator may also file proration unit plats for individual wells in a field.

Source Note:The provisions of this §3.40 adopted to be effective January 1, 1976; amended to be effective January 9, 2002, 27 TexReg 150; amended to be effective February 1, 2016, 41 TexReg 785.