Proposed E&P Unitization Guidelines

by Dentons


Mexico’s Ministry of Energy (Secretaría de Energía) (“SENER”) has sent for notice and comments a proposed draft of the Guidelines establishing the procedure to instruct the unitization of shared reservoirs and approve the terms and conditions of unit agreements (the “E&P Unit Guidelines”).

The Hydrocarbons Law (Ley de Hidrocarburos), its Regulations (Reglamento de la Ley de Hidrocarburos) and the terms and conditions of entitlements (asignaciones) (“Entitlements”) and hydrocarbons exploration and extraction contracts (“E&P Contracts”) foresee the possibility of SENER instructing the formation of oil and gas units (each a “Unit”) whenever an Entitlement holder or contractor believes a reservoir or field may be shared with an adjoining Entitlement area, E&P Contract area or acreage devoid of any of the foregoing.

Recent oil and gas development by private operators in the Gulf of Mexico has shown the possibility of existing shared field(s) or reservoir(s). The proposed E&P Unit Guidelines are aimed at regulating the formation of Units, approval of unit operating agreements proposed by operators (each a “UOA”) and, where appropriate, issuance of the so-called Unit Orders (Resolución de Unificación) (each a “Unit Order”) when a UOA is not reached or approved.

The E&P Unit Guidelines, among others:

  • Introduce international oil and gas legal and technical principles used in unit operations, such as the “rule of capture”, field-wide rules, and redetermination procedures under UOAs and Unit Orders;
  • Expressly establish that SENER’s actions and authority, within the scope of the E&P Unit Guidelines, shall be enforced considering the “national interests”;
  • Include the possibility of preliminary UOAs whenever there is not enough information to determine the existence of shared fields of reservoirs, but there is a possibility of one;
  • Introduces provisions aimed at limiting liability of adjoining operators/contractors for drainage while a UOA or Unit Order is not in effect;
  • Provide that hydrocarbons produced in an area different to a relevant E&P Contract area or Entitlement area, as the case may be, shall be deemed to have been produced under the original granting instrument;
  • Foresee the possibility of Entitlement holders and IOCs to conduct activities in areas exceeding their acreage if such area(s) is(are) devoid of an E&P Contract or Entitlement; and
  • Establish the minimum terms and conditions that UOAs shall have, and foresee the possibility of SENER and/or the National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos) issuing a model UOA at a later date.

In all cases, whether a UOA is reached by the parties involved or through a Unit Order, SENER has exclusive jurisdiction to declare the existence of a shared field or reservoir, approve the terms and conditions of UOAs and, when necessary, issue Unit Orders.

The transitory provisions of the E&P Unit Guidelines are generally silent on whether the unitization provisions of E&P Contracts and Entitlements will continue to govern such instruments, or whether the E&P Unit Guidelines shall be understood to invalidate or otherwise apply on a “gap-filling” basis.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dentons | Attorney Advertising

Written by:


Dentons on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.