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Where our lease review indicates a potential offset well obligation, the following process will apply:
A proposed recompletion of an existing well does not satisfy an offset obligation under the lease. However, under certain circumstances, Encana will consider a proposal to recomplete to satisfy an offset. Approval is at the sole discretion of Encana. Recompletion proposals will be handled in confidence and reviewed only by technical support staff in our Lease Compliance group.
Regardless of the original lease terms, lessees will have the option to pay a compensatory royalty or surrender all non-producing formations. The offer of a compensatory royalty option where it is otherwise not provided for in the lease, will only be open for acceptance if the lessee responds to the Offset Notice within the requested timelines.
We have created a simplified Compensatory Royalty Calculator (Excel) to assist lessees in making their elections. It is intended only to provide an estimate of the compensatory royalty payable; lessees are advised to independently evaluate the data needed to use this calculator and apply whatever due diligence may be deemed necessary.
Where the lease does not provide for surrender of non-producing formations or payment of a compensatory royalty, lessees may also be required to execute one of the following agreements:
If one of these agreements is required, we will prepare and forward the applicable document for lessee's execution. The samples here are for review and information only and are subject to change without notice. Provision of these sample agreements for information purposes does not create any binding obligations on Encana.