## Facts

- Gilmore owned a working interest in the Hartzog Draw Field in Campbell and Johnson Counties, Wyoming, a producing field with more than 170 wells and more than 80 working-interest owners.
- The Wyoming Oil and Gas Conservation Commission conducted multi-year investigations and hearings to address declining reservoir pressure and the risk of unrecoverable oil.
- Technical evidence showed reservoir pressure had dropped near the bubble point and that delay in unitization and secondary recovery would cause substantial loss of recoverable oil.
- The Commission found waste was occurring and ordered cessation of production pending implementation of a unitization plan.
- Over approximately three years, owners and technical representatives evaluated numerous allocation methods and ultimately agreed to a compromise allocation approach (“formula 67”) using multiple parameters; it received 75.89% approval from working-interest owners.
- The Commission reduced the statutory approval threshold from 80% to 75% as authorized and approved the unitization plan and formula 67; Gilmore’s tract was assigned 1.2% of unit production.
- Gilmore challenged the order, claiming the plan failed to protect his correlative rights because (1) the allocation relied in part on recent production, disadvantaging him due to downtime, and (2) an alleged historical survey error understated his acreage by about 33 acres.
- The district court affirmed the Commission’s order, and Gilmore appealed.

## Issues

1. Whether the Commission’s findings and conclusions that the unitization plan and allocation formula protected Gilmore’s correlative rights were supported by substantial evidence and in conformity with law.
2. Whether the Commission lawfully approved the unitization plan based on the reduced 75% owner-approval threshold.
3. Whether Gilmore’s production-downtime objection and asserted acreage shortfall required reversal of the allocation determination.

## Decision

- The Wyoming Supreme Court affirmed the district court and the Commission’s unitization order.
- The court held the Commission’s findings on waste, the need for unitization, and protection of correlative rights were supported by substantial evidence.
- The court upheld the Commission’s statutory authority to reduce the approval threshold and to approve formula 67.
- The court rejected Gilmore’s challenges based on downtime and the asserted survey-acreage discrepancy as insufficient to show the allocation was unlawful, arbitrary, or confiscatory.

## Legal Principles

- Judicial review of conservation commission orders is limited; factual determinations are upheld if supported by substantial evidence and the agency action conforms to governing statutes.
- Oil and gas conservation statutes authorize compulsory unitization to prevent waste and to enable efficient secondary recovery when supported by the record.
- Correlative rights require a reasonable opportunity for each owner to receive a fair share of production (or its equivalent) under a unit plan; courts do not reweigh technical judgments where the Commission’s allocation choice is reasonably supported.
- An allocation formula may consider multiple technical and operational factors, including production-related measures, so long as the overall allocation is not arbitrary or confiscatory.
- Conservation commissions may rely on ownership and acreage information presented in the unitization record and are not the forum for resolving underlying title or survey disputes absent a showing that reliance on the record defeats statutory protections.

## Conclusion

The court upheld the Commission’s compulsory unitization of the Hartzog Draw Field and adoption of a multi-factor allocation formula, concluding that the Commission acted within its statutory authority to prevent waste and that its determinations protecting correlative rights were supported by substantial evidence.


Gilmore v. Oil & Gas Conservation Comm’n, 642 P.2d 773 (Wyo. 1982)