JVViews: November 2013 Issue

Editor's Note

JV Dynamics - Quick Tips

October Luncheon Summary

Upcoming November Luncheon

PJVA's 15th Annual Christmas Social

Petroleum Joint Venture Extension Certificates

eStudies and Web Based Learning - The JV Analyst I course is now online!

Looking for a New Opportunity?

PJVA LinkedIn® Group

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Editor's Note

A Note from the Editor...

The year is quickly coming to a close and for most individuals there is a flurry of activity to complete those objectives we set at the beginning of the year. Just as importantly, we should take time to reflect on what we've accomplished over the year. I would like to extend congratulations to the GPAC/PJVA Conference Committee and all the speakers / participants for the great conference held on October 23rd!

Besides the keynote speaker, Alex Epstein with the Centre for Industrial Progress, eighteen presentations and fifteen exhibitors' booths were available for attendees. A key theme from several of the speakers is the continuous need for collaboration, developing relationships and transparency, whether working with industry partners, regulators or the public. The conference ended with a powerful message from Calgary's own Olympic luger Alex Gough, the first Canadian luge athlete to win a World Cup race, when she won a bronze medal in 2011 at Paramonovo, Russia. She shared with us how the ability to shift her mindset from the frustration and disappointment of the 2010 Olympics enabled her to move to a winning performance in 2011. It is within our control to shift our mentality and overcome challenges and adversity. Don't lose sight of that ultimate goal!

Check out the new article on Units under JV Dynamics - Quick Tips

Following the October EMS, PJVA is exploring the addition of a Help Link on the website. More info will be forthcoming in the months ahead.

Don't forget to RSVP for the upcoming Christmas social on Wednesday, November 27th at the Petroleum Club.

November is also a time of Remembrance - please take time to remember all our Veterans and to support the Calgary Poppy fund and Veteran's food bank.

Joan Lee

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JV Dynamics - Quick Tips

NOTICE OF INTENTION TO WITHDRAW. WHAT DOES THAT MEAN TO A UNIT AGREEMENT?

Have you received this notice?



This notice is becoming increasingly common as the Department of Energy steps up monitoring of units that have not conducted "Unit Operations" for more than twelve months.

What does it mean if you receive this notice?

The Minister of Energy can issue this notice to Unit Operators in accordance with Sections 24(3) and 24(4) of the Petroleum & Natural Gas Tenure Regulations.

The notice advises the Unit Operator of the Crown's intention to withdraw from the Unit. Withdrawal by the Crown will cause the Unit to terminate and the lands will revert back to the current mineral owners.

Under Sections 24(3) and 24(4) "Unit Operations" are defined as activities conducted for the purpose of producing petroleum or natural gas or any operations undertaken for the purpose of developing/exploiting petroleum or natural gas.

In instances where there have not been Unit Operations conducted for a period of at least twelve consecutive months the Regulations provide the Crown with the right to withdraw as party to the Unit Agreement upon giving the Operator three months' notice.

During this three month period the Unit Operator can apply to have the notice withdrawn. The application must be accompanied by evidence showing;

i) that Unit Operations had not ceased before the date of the notice, or

ii) that Unit Operations have recommenced since that date and are continuing in good faith, or

iii) that Unit Operations were suspended pursuant to the force majeure provisions of the Unit Agreement.

The concept of "good faith" is important to note. Under this Section, the Crown expects that Unit Operations will be sustained for an extended period of time. An Operator that brings on a well only to have it shut-in a short time later would not meet the Crown's expectation for continuing operations.

What happens next?

After the application is submitted, three things could happen;

1. the Minister may withdraw the notice;
2. the Minister may grant an extension; or
3. the Minister makes a declaration that the Crown has withdrawn as a party to the Unit Agreement.

The Minister would withdraw the notice if it deems that Unit Operations have recommenced. This could occur if the Unit Operator placed a well back on production and the Crown agreed that it was capable of sustained production.

The Minister may grant an extension if the Unit Operator identifies a unit well that can be brought back on for sustained production. For example, the 14-15-025-05W5 well is identified by the Unit Operator as a candidate to be placed on production. However, pipeline work is needed and the work needed cannot be completed within the three month response time frame due to the requirement to secure temporary surface access rights. In this instance, the Minister, upon reviewing the Operator's proposal, timelines and downhole well information might agree to provide an extension to enable the Operator to complete the work.

The Minster may also withdraw from the Unit if the Unit Operator fails to respond or does not provide the information as required by Section 24(4).

What happens if the Crown withdraws?

Clause 1402 of the Unit Agreement states "any Party may give the Unit Operator written notice of its desire to terminate the unitization provided for herein. If upon expiration of a period of ninety (90) Days following the giving of any such notice the Working Interest Owners have not commenced, or recommenced, Unit Operations with a view to diligently pursuing the production of Unitized Substances on a sustained basis the unitization provided for herein shall terminate."

If the Unit is terminated

• lands revert back to the current mineral Owners and are then governed under the terms of the applicable JOA or the initial lease document contributed to the Unit;
• the Unit Agreement terminates but the Unit Operating Agreement remains in effect until all wells have been abandoned, Unit Facilities salvaged and reclamation completed and the final settlement of accounts has been made among the Owners; and
• the Crown may issue a Notice respecting Non-Productivity in accordance with Section 18 of the Petroleum and Natural Gas Tenure Regulation. This notice states that the mineral holder has one year to establish production or provide evidence that lands are capable of production. Failure to do so will result in expiration of that portion of the leased rights identified in the notice as being at risk.

To Conclude -

Upon receipt of a Notice to Withdraw

1. Read and understand the Unit Agreement. Older Unit Agreements are likely not PJVA standard and the applicable clauses must be considered. Determine which lands are at risk if the Unit dissolves.
2. Read and understand the applicable sections of the Petroleum and Natural Gas Tenure Regulation - http://www.energy.alberta.ca/Tenure/872.asp
3. Seek clarification from the Crown for any questions. Be direct and open. Remember that Unit Operations must be sustained and conducted in good faith in order for the Crown to consider withdrawing a notice.
4. Prioritize and respond within the three month time frame provided.

The Petroleum Joint Venture Association (or PJVA) is a non-profit organization that represents and supports Canadian individuals and organizations involved in petroleum joint venture. The PJVA provides a multi-disciplinary forum to address current petroleum joint venture issues. The PJVA supplies model agreements on which many of today's joint ventures are based, and also provides training on these model agreements and basic principles of joint ventures. This training is a good starting point to understanding the commercial aspects that can impact your project or operation.

To learn more about Joint Ventures and the Petroleum Joint Venture Association (PJVA), go to www.pjva.ca. For online training options, select JV eStudies for individual courses, or www.mtroyal.ca for certificate programs (online and classroom based); PJVA Director - Academic Education - Tracey Moore-Lewis.

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October Luncheon Summary

PJVA Luncheon
October 17, 2013
License2Share: By the Industry, for the Industry
Dan Brown, CGI

We had a great presentation in October on a new approach to data sharing amongst partners by Dan Brown at CGI. Here is a brief summary and more information, including the presentation can be found on the PJVA Website: https://pjva.ca/events/lunchprev.php

License2Share is providing a standardized system for the industry and offers a collaborative approach to reduce business risk and cost.

License2Share offers:

• one application for all information
• complete coverage of content
• information sharing
• cost and time efficiency

Information lives in an online environment, the "cloud", which provides:

• access from anywhere with an internet connection
• immediate access to the most current information
• transparency to shareholders
• up to 50% reduction in in-house IT resources

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Upcoming November Luncheon

The PJVA is pleased to welcome David Browne, Vice President of Marketing at Trican Well Service Ltd. to give an interesting look at the world of Fraccing in a luncheon titled "Talking Frac". Here is a brief summary:

Dave has been a fracturing engineer for more than 20 years. He will provide an introduction to the hydraulic fracturing process, a discussion of recent public issues relating to fracturing, and an outline of the facts that address some of the "myths" that have been spread within the public debate. A take away from the talk will be - how to discuss fracturing with concerned friends and family.

To register, please go to PJVA website: https://pjva.ca/events/luncheons.php

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PJVA's 15th Annual Christmas Social

Click here to RSVP by November 24, 2013

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Petroleum Joint Venture Extension Certificates

For more informaiton and online registration, please click here.

E-mail: cescience@mtroyal.ca
Information: 403.440.6278
Location: Lincoln Park Campus, 4825 Mount Royal Gate SW

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eStudies and Web Based Learning

The JV Analyst I course is now online!

This course is designed to provide you with a solid understanding of the role of the Joint Venture Analyst and the responsibilities that accompany that role. Successful completion of this course is a good first step and will prepare you to enter a career in joint venture analysis, but it will not qualify you for a joint venture analyst position. This course is recommended to be used in combination with practical industry experience.

The course consists of the following 9 modules:

• Introduction to Joint Venture Analyst
• The Role and Responsibilities of the Joint Venture Analyst
• Introduction to Petroleum Production and Agreements
• Petroleum Production from Wellhead to Plant
• Joint Venture Business Drivers
• Risk Management
• CO&O Analysis
• Introduction to Contract Law
• Land and Mineral Contracts
• Royalties
• Project Economics and Fees
• Common Stream Operating and Marketing

Direct them to the PJVA eStudies home page to learn more!

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Looking for a New Opportunity?

Check out the PJVA Job Board for recent postings.

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PJVA LinkedIn® Group

PJVA is now on LinkedIn®, the world's largest professional network. It's a great way to stay connected and exchange ideas with other PJVA members and industry professionals.

Click here to join the discussion!

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PJVA was incorporated in 1985 to represent individuals and organizations involved in petroleum joint ventures. JVViews is published to keep members informed about upcoming PJVA and industry events, courses and seminars offered and/or sponsored by PJVA and current projects being facilitated by the Association.