'Twas the night before Christmas, When all through the house,
Nobody was buying, not even Annie Mouse;

Our shares were all locked in the vault with great care,
In hopes that some profits soon would be there;

Investors were nestled all snug in their beds,
While visions of frac trucks danced in their heads.

To help pass the time while waiting for Clause,
I thought I'd pass the time reviewing Mining Laws.

Then all of a sudden I got to Section 29
It suddenly hit me, (or perhaps it was it the wine.)

It's no wonder that they had decided to unite.
It all became clear, like turning on a light.

They said they are doing it because 'it's the right thing to do'
But I don't think that's why, so I'll give you a clue.

Section 29 deals with Joint Exploitation
(It's all in English, and requires no translation.)

"Mining entrepreneurs shall agree on the merging of the land";
It all seems so simple, this must have been planned!

'Unitization' is the word of the day.
There's no if's, and's, or but's, I see no other way.

A deliberate effort to consolidate all
To combine some of our land, with Exxon and MOL.

They must come to an agreement, or say they have tried
Otherwise the government will step in and decide.

The participation formula will be the heart of this accord
The final outcome to be decided by a Board.

It will arrive after long and laborious negotiation,
Between all of the parties, involving lots of frustration.

While some will get more, and some will get less
How it will end is anyones guess.

Operating efficiency is what it's all about
To maximize production, to that there's no doubt.

Come to an agreement, is what they must do
That is the law, at least in my view.

So while the stock price today is low and depressing,
Each and every day the project is progressing.

Our day will come, I'm sure I am right.
Merry Christmas to all, and to all a good night.



www.mbh.hu/Miningact.pdf

-------------------------------

Joint Exploitation

Section 29

(1) If several mining entrepreneurs are simultaneously entitled to work a connected layer of mineral raw materials, they shall coordinate their activities, and shall, within the framework thereof, provide for the conditions of joint, professional and reasonable exploitation. In the absence of agreement, the sequence and conditions of exploitation shall be established by the mine supervision.

(2) The parties exploiting hydrocarbon jointly shall appoint a representative from among themselves, who has the rights and duties of a mining entrepreneur.

(3) If several mining entrepreneurs are entitled to exploit layers of mineral raw materials covering one another or, connected with one another directly or by protective pillars, the mining entrepreneurs shall agree on the merging of the areas, and on the conditions of exploitation. The validity of the agreement requires the approval of the mine supervision. In the course of granting its approval, the mine supervision may establish conditions in the interest of meeting the contractual obligations, of the management of mineral resources, safety, and the protection of property.

------------------------------

Further Reading


http://library.findlaw.com/2003/Jan/...
http://goliath.ecnext.com/coms2/gi_0...


Unitization: Unitization is the joint, coordinated operation of an oil or gas reservoir by all the owners of rights in the separate tracts overlying the reservoir or reservoirs. (13)

Unitization is generally acknowledged as the best method of producing oil and gas efficiently and fairly, for the following reasons:

* It avoids the economic waste of unnecessary well drilling and construction of related facilities that would otherwise occur under the competitive rule of capture.

* It allows sharing of development infrastructure, thus lowering the costs of production through economies of scale and operating efficiencies.

* It maximizes the ultimate recovery of petroleum from a field according to the best technical or engineering information, whether during primary production operations or enhanced recovery operations.

* It gives all owners of rights in the common reservoir a fair share of the production

* It minimizes surface use of the land and surface damages by avoiding unnecessary wells and infrastructure.


“Unitization..is a deliberate effort to consolidate all, or a sufficiently high percentage of, the royalty and participating interests in a pool as will permit reservoir engineers to plan operation of the pool as the natural energy mechanism unit which it is. This means taking production at the locations and rates it is most efficient to take it, without disruption of the scheme by the legal rights inhering in competing properties.


"The artificial property lines man has drawn upon these pools, coupled with the lessor-lessee rights and obligations arising from competitive production methods sanctioned or even required by law, make virtually impossible maximum ultimate recovery in the absence of unitization"

In international practice, the universal trigger for requiring unitization is geological: A petroleum reservoir is found to extend underneath contiguous contract areas, so different parties have rights over the common reservoir


"The participation formula is the heart of the unitization agreement. It is usually the most difficult problem to solve, but unitization is impossible until it is agreed
upon by all of the affected parties concerned, especially the participating interest owners. The formula determines the portion of the unitized substances each
participating party is to receive, and it is usually arrived at after long and laborious negotiation."


"While, by definition, some participating interest owners will receive more than their proportionate value and some will receive less, even the losers on the formula finally chosen will become net winners, because overall production will hopefully be substantially increased over the levels that would have been achieved from non-unitized production"


"Before one can arrive at any kind of allocation formula, the relative economic values for the entire unit must be evaluated in detail. "