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Hawkins Field Unit (HFU). The Texas Railroad Commission, which
regulates oil and gas operations in Texas, approved the HFU for
unitization on November 26, 1974. In a unit agreement, effective
January 2, 1975, interest owners in the area utilized oil and gas
rights pertaining to the unitized formation. The unit agreement
embraces interests of approximately 2,200 royalty interest
owners3 and 300 working interest owners. Exxon is the sole unit
operator of the HFU and possesses the exclusive right to conduct
HFU operations pursuant to a unit operating agreement between
Exxon and the other working interest owners.4
During the early operation of the HFU, the Federal
Government, acting initially through the Federal Energy
Administration and later through the Department of Energy (DOE),
regulated the price of domestic crude oil through the application
of two-tier price regulations under 10 C.F.R. secs. 212.73 and
212.74 (1975). Producers were required to sell "old" crude oil
at the lower tier price and were allowed to sell "new" crude oil
at a higher price.
In June 1978, the DOE filed suit against Exxon as operator
of the HFU. The DOE contended that Exxon had misclassified crude
oil produced from the HFU, which resulted in overcharges in
violation of the DOE's petroleum price regulations. Exxon
3Decedent, Jessamine, and Frankie were royalty interest
owners.
4Exxon was the HFU's largest working interest owner.
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Last modified: May 25, 2011