This form is pursuant to The Act of February 25, 1920, as amended and supplemented, authorizes communitization or drilling agreements communitizing or pooling all or a portion of a Federal oil and gas lease, with other lands, whether or not owned by the United States, when separate tracts under the Federal lease cannot be independently developed and operated in conformity with an established well-spacing program for the field or area.
The New Mexico Commoditization Agreement, also known as the YMCA, is a legal contract that allows for the unitization of oil and gas properties in the state of New Mexico. This agreement helps operators efficiently and effectively develop resources that cross property boundaries and ensures fair distribution of profits among the participating parties. The primary purpose of a New Mexico Commoditization Agreement is to promote cooperative and unified management of oil and gas operations. It encourages pooling of contiguous or leasehold interests, thereby preventing waste and maximizing production from shared reservoirs. With this agreement, operators can combine oil and gas leases and create a cohesive unit that allows for collective drilling, production, and development. There are various types of New Mexico Commoditization Agreements, each tailored to different situations and needs. These include: 1. Field-Wide Unit Agreement: This type of agreement is used to pool and develop an entire field or reservoir. It involves multiple leaseholders coming together to collectively manage resources for maximum efficiency and production. 2. Pooling Agreement: A pooling agreement is specific to a particular pool or reservoir within a field. It allows operators to combine leases within the defined pool and efficiently extract hydrocarbon resources from that area. 3. Proration Agreement: This agreement regulates the allocation and distribution of oil and gas production from a pool or field. It ensures fair distribution among leaseholders based on their individual contributions and encourages an equitable sharing of profits. 4. Enhanced Recovery Unit Agreement: An enhanced recovery unit agreement is designed for reservoirs where secondary or tertiary recovery methods, such as water flooding or CO2 injection, are employed. It enables operators to jointly plan and implement advanced extraction techniques to increase reservoir yields. The New Mexico Commoditization Agreement serves as a critical tool in the management, conservation, and optimal utilization of the state's oil and gas resources. It allows for streamlined operations, coordinated development, and fair distribution of revenues among leaseholders. By enabling effective collaboration, this agreement contributes to the overall growth and sustainability of the oil and gas industry in New Mexico.
