[Code of Federal Regulations]
[Title 25, Volume 1]
[Revised as of April 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 25CFR226]

[Page 715-716]
 
                            TITLE 25--INDIANS
 
     CHAPTER I--BUREAU OF INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR
 
PART 226_LEASING OF OSAGE RESERVATION LANDS FOR OIL AND GAS MINING
--Table of Contents
 
Sec.  226.15  Unit leases, assignments and related instruments.

    (a) Unitization of leases. The Osage Tribal Council and Lessee or 
Lessees, may, with the approval of the Superintendent, unitize or merge, 
two or more oil or oil and gas leases into a unit or cooperative 
operating plan to promote the greatest ultimate recovery of oil and gas 
from a common source of supply or portion thereof embracing the lands 
covered by such lease or leases. The cooperative or unit agreement shall 
be subject to the regulations in this part and applicable laws governing 
the leasing of the Osage Mineral Estate. Any agreement between the 
parties in interest to terminate a unit or cooperative agreement as to 
all or any portion of the lands included shall be submitted to the 
Superintendent for his approval. Upon approval the leases included 
thereunder shall be restored to their original terms: Provided, That for 
the purpose of preventing waste and to promote the

[[Page 716]]

greatest ultimate recovery of oil and gas from a common source of supply 
or portion thereof, all oil leases, oil and gas leases, and gas leases 
issued heretofore and hereafter under the provisions of the regulations 
in this part shall be subject to any unit development plan affecting the 
leased lands that may be required by the Superintendent with the consent 
of the Osage Tribal Council, and which plan shall adequately protect the 
rights of all parties in interest including the Osage Mineral Estate.
    (b) Assignments. Approved leases or any interest therein may be 
assigned or transferred only with the approval of the Superintendent. 
The assignee must be qualified to hold such lease under existing rules 
and regulations and shall furnish a satisfactory bond conditioned for 
the faithful performance of the covenants and conditions thereof. Lessee 
must assign either his entire interest in a lease or legal subdivision 
thereof, or an undivided interest in the whole lease: Provided, That 
when an assignment covers only a portion of a lease or covers interests 
in separate horizons such assignment shall be subject to both the 
consent of the Osage Tribal Council and approval of the Superintendent. 
If a lease is divided by the assignment of an entire interest in any 
part, each part shall be considered a separate lease and the assignee 
shall be bound to comply with all the terms and conditions of the 
original lease. A fully executed copy of the assignment shall be filed 
with the Superintendent within 30 days after the date of execution by 
all parties. If requested within the 30-day period, the Superintendent 
may grant an extension of 15 days. A filing fee of $10 shall accompany 
each assignment.
    (c) Overriding royalty. Agreements creating overriding royalties or 
payments out of production shall not be considered as an interest in a 
lease as such term is used in paragraph (b) of this section. Agreements 
creating overriding royalties or payments out of production are hereby 
authorized and the approval of the Department of the Interior or any 
agency thereof shall not be required with respect thereto, but such 
agreements shall be subject to the condition that nothing in any such 
agreement shall be construed as modifying any of the obligations of 
Lessee under his lease and the regulations in this part. All such 
obligations are to remain in full force and effect, the same as if free 
of any such royalties or payments. The existence of agreements creating 
overriding royalties or payments out of production, whether or not 
acutally paid, shall not be considered in justifying the shutdown or 
abandonment of any well. Agreements creating overriding royalties or 
payments out of production need not be filed with the Superintendent 
unless incorporated in assignments or instruments required to be filed 
pursuant to paragraph (b) of this section. An agreement creating 
overriding royalties or payment out of production shall be suspended 
when the working interest income per active producing well is equal to 
or less than the operational cost of the well, as determined by the 
Superintendent.
    (d) Drilling contracts. The Superintendent is authorized to approve 
drilling contracts with a stipulation that such approval does not in any 
way bind the Department to approve subsequent assignments that may be 
provided for in said contracts. Approval merely authorizes entry on the 
lease for the purpose of development work.
    (e) Combining leases. The lessee owning both an oil lease and gas 
lease covering the same acreage is authorized to convert such leases to 
a combination oil and gas lease.

[39 FR 22254, June 21, 1974. Redesignated at 47 FR 13327, Mar. 30, 1982, 
as amended at 55 FR 33115, Aug. 14, 1990]

                               Operations