(a) To qualify as a marginal property eligible for royalty prepayment or accounting and auditing relief under this part, the property must meet the following requirements: ------------------------------------------------------------------------
(1) Not in an agreement......... The lease must ..................
qualify as a
marginal property
under paragraph
(b) of this
section.(2) Entirely or partly committed The entire Agreement
to one agreement. agreement must production
qualify as a allocable to your
marginal property lease may be
under paragraph eligible for
(b) of this relief under this
section. part. Any
production from
your lease that
is not committed
to the agreement
also may be
eligible for
separate relief
under paragraph
(a)(4) of this
(4) of this
table.(3) Entirely or partly committed Each agreement For any agreement
to more than one agreement. must qualify that does
separately as a qualify, that
marginal property agreement's
under paragraph production
(b) of this allocable to your
section. lease may be
eligible for
relief under this
part. Any
production from
your lease that
is not committed
to an agreement
also may be
eligible for
separate relief
under paragraph
(a)(4) of this
(4) of this
table.(4) Partly committed to an The part of the
agreement and you have lease that is not
production from the part of the committed to the
lease that is not committed to agreement must
the agreement. qualify
separately as a
marginal property
under paragraph
(b) of this
section.------------------------------------------------------------------------
(b) To qualify as a marginal property for a calendar year, the combined equivalent production of the property during the base period must equal an average daily well production of less than 15 barrels of oil equivalent (BOE) per well per day calculated under paragraph (c) of this section.
(c) To determine the average daily well production for a property, divide the sum of the BOE for all producing wells on the property during the base period by the sum of the number of days that each of those wells actually produced during the base period. If the property is an agreement, your calculation under this paragraph must include all wells included in the agreement, even if they are not on a Federal onshore or OCS lease.