Common use of Unit Operating Agreement Clause in Contracts

Unit Operating Agreement. The unit operator and the owners of working in- terests in the unitized leases must enter into a unit operating agreement. The unit operating agreement must de- scribe how all the unit participants will apportion all costs and liabilities incurred maintaining or conducting op- erations. When a unit involves one or more net-profit-share leases, the unit operating agreement must describe how to attribute costs and credits to the net-profit-share lease(s), and this part of the agreement must be ap- proved by the Regional Supervisor. Otherwise, you must provide a copy of the unit operating agreement to the Regional Supervisor, but the Regional Supervisor does not need to approve the unit operating agreement.