PUN/Suffix Requirements

PUN/Suffix Requirements document

Table of Contents

1.0.0 PUN Suffix/State Lease Conceptual Overview

1.1.1.PUN/Suffix

1.1.1.1.Business Rules for PUN Assignment

1.1.1.2 Format

1.1.1.3 New Assignment of PUN and Suffix

1.1.1.4 Changes to PUN and/or Suffix

1.1.1.5 Deactivation of PUN and/or Suffix

1.2.1 PUN/State Lease

1.2.1.1 Assignment Procedures

*1.2.1.2 PUN/Lease exception reports

2.0.0 PUN maintenance Activities

2.1.1 Monitor Pun Events TRD300

2.1.2 Approve / Deny Auto PUN Events TRD301

2.1.3 Maintain PUN Comments TRD302

2.1.4 Maintain Production Unit Numbers TRD303

2.1.5.1Maintain Suffix code TRD305

2.1.6 Re-Assign Master Operator for PUN Group TRD305

2.1.7 Attach Well Completion to PUN TRD306

2.1.8 Identify PUN Suffix Subdivision TRD307

2.1.9 Well Completion Inquiry by ULSTR TRD308

2.1.10 Inquire PUN Well Completion TRD309

2.1.11 Inquire Well Completion PUN History TRD310

2.1.12 Inquire PUN History TRD311

2.1.13 Inquire Suffix Tax Rates and Allocations TRD312

2.1.14 Inquire Reporting OGRIDS by PUN TRD313

2.1.15 Inquire PUN Well Completion by POD/meter number TRD314

3.0.0 PUN Notices

3.1.1 Produce PUN Notification TRD315

3.1.1.1 Production Unit Number (PUN) Assignment Report

3.1.1.2 Production Unit Number (PUN) / PUN Suffix Update Report

3.2.1 Selection for PUN Notification TRD316

4.0.0.PUN Events

4.1.1 Evaluate PUN Events TRD317

4.1.1.2 PUN Type Logic Rules

4.1.1.3 Pun Type Exceptions:

4.1.1.4 Master Operator Assignment Rules

4.1.1.5 Miscellaneous Rules

4.1.1.6 Allocation Percent Calculation Rules

5.0.0 PUN lease Maintenance

5.1.1 Maintain / Inquire PUN Leases SLR400

5.1.2 Maintain / Inquire PUN Lease – Beneficiary percentages SLR401

6.0.0 PUN Lease Notices

6.1.1 PUN Lease Notification SLR402

6.1.1.1 Production Unit Number (PUN) Assignment

6.1.1.2 Production Unit Number (PUN) / State Lease Update

Business process

The focus of this document is to identify requirements at a business process level. A business process is a stand-alone logical unit of work. Ideally, it should consist of end-to-end processing that begins with an event of some kind and ends in the production of the output that responds to the event. This is known as straight-through processing (STP). Business reality will dictate to an application what the business processes are. Within each process however, there will be a number of steps. These fit into the STP-like manner. At the point in the development cycle where requirements are transformed into specifications, the discrete steps in each process are defined.

Overview

The concept of the PUN is vital to the operation of the Oil & Gas Tax and Royalty systems of the State of New Mexico. The Production Taxes are reported at the PUN/suffix level. The StateLand office combines the PUN with their lease numbers to provide the ability to evaluate the accuracy of the Royalty payments.

Vital to the maintenance of the correct relationship over time of business entities within ONGARD is the concept of “effective-dated tables”. The PUN entry process will not allow a delete function; the validity of the entry would be controlled with a beginning date and a termination date. This concept is discussed in the “technical architecture” section.

1.0.0 PUN Suffix/State Lease Conceptual Overview

1.1.1.PUN/Suffix

The Production Unit Number (PUN) is used by the State of New Mexico as an accounting Id for reporting Oil & Gas Production Taxes (Oil & Gas Emergency School Tax, Oil & Gas Conservation Tax, Oil & Gas Severance Tax and Oil & Gas Ad Valorem Production Tax) and Oil & Gas State Royalty. The PUN Suffix is used for designating Taxing Authorities within the PUN and is used only when reporting the Oil & Gas Production Taxes. A PUN suffix number is included on every tax line filed monthly for the payment of Production taxes. This number is the basis for how the revenue is distributed to the tax recipients.

1.1.1.1.Business Rules for PUN Assignment

The PUN represents an "accounting" unit of property that can be described by a combination of the following identifying characteristics:

Master Operator (of the producing property)

+

Property Name (as defined by the Master Operator)

+

Pool

+

Communitization (Comm.) or Unitization (Unit) Agreement

Newly producing well completions are assigned to a PUN whose above characteristics are identical to those of an existing PUN.

The PUN Suffix represents Land Type + a Taxing Authority; i.e., a County and School District or a County, School District and Municipality.

Each PUN Suffix is derivedfrom the set of ULSTRs and/or Lots identified by the well spacing units and which form the portion of the Lease or Communitization or Unitization pertaining to a Land Type and Taxing Authority combination.

1.1.1.2 Format

The PUN format is NNNNNNY where:

NNNNNNis a six digit sequential number

Yis a Mod 11 check digit

The PUN number is system generated in the format outlined above.

The PUN Suffix format is XCCNN where:

Xis an alphabetic Land Type code, e.g., "S" for State lands, "P" for Fee (private) lands, "F" for Federal lands, "I" for Indian (other) lands..

CCis a numeric API county code assigned to New Mexico counties, e.g., '25' is for Lea County, '05' is for Chavez County, '45' is for San Juan County, etc.

NNis a unique sequential number for each applicable combination of school district and municipality within county.

1.1.1.3 New Assignment of PUN and Suffix

The assignment of PUN and Suffix begins with the operator's Request for Transport (OCD's form C-104) for a particular well completion (API Number + Pool). The ONGARD system:

1)Identifies the Master Operator, property name, pool and spacing unit for the well completion;

2)Identifies, through the ULSTRs (and/or Lots) included in the spacing unit; whichleases, state leases and/or Communitizations or Unitizations are associated with the well completion;

3)Assigns the new well completion to an existing PUN with the same "identifying" characteristics, or establishes a new PUN for the well completion;

4)Assigns a PUN Suffix for each Land Type and Taxing Authority combination included in the well completion's spacing unit. The PUN type is determined by the associated state lease, communitization or unitization agreement if present. If the well completion's spacing unit does not involve a state lease or a communitization/ unitization including state lands, then the PUN Suffix assignment is based only on the ULSTRs and Lots included in the spacing unit.

5)The system must then produce a notice to the master operator OGRID, the ability to select the method of notification (E-mail or paper notice) must be provided.

Once the well completion is assigned a production unit number and corresponding suffixes, the master operator is notified of the assignment along with the "rolled up" tax rate (sum of the tax rates for each Oil & Gas ProductionTax program) at the PUN Suffix level.

1.1.1.4 Changes to PUN and/or Suffix

If any of the identifying characteristics are changed for a well completion (e.g., change in Master Operator), then the well completion is re-assigned to a "new" PUN meeting the "new" characteristics of the well completionor the characteristic of the PUN are modified. The suffixes within a PUN are adjusted when boundaries to a well completion's spacing unit, lease, communitization or unitization are adjusted.

Events which may cause a PUN re-assignmentor the PUN to be updated are:

• Change in Master Operator
• Change in Property Name
• A well completion's change from an undesignated pool to a designated pool
• Establishment of a Unitization or Communitization

Events which may cause an adjustment to a PUN's suffix list are:

• Change in the well completion's spacing unit
• Change in a Unitization's participating area
• Change in a communitized area
• Change in lease tract participation

Any PUN and/or Suffix re-assignments (for one or more well completions) the master operator is notified and provided with the corresponding rolled-up tax rates.

1.1.1.5 Deactivation of PUN and/or Suffix

Events which cause deactivation of a PUN and its related Suffixes include:

• All well completions assigned to PUN are plugged and abandoned
• State lease cancellation or expiration (only when the PUN is related to one state lease)
• Termination of a Communitization or Unitization involving state lands

The master operator is notified of a deactivated PUN along with the corresponding deactivated Suffixes, and the effective month and year.

1.2.1PUN/State Lease

The Royalty Filer uses both the Production Unit Number (PUN) and State Lease Number to report Oil & Gas State Royalty. The royalty is reported by state lease within a PUN. This allows the State to accurately verify, process, and follow-up on royalty remittances.

1.2.1.1 Assignment Procedures

At the time a PUN is assigned to a well completion, the state lands involved and the associated State Leases are identified by the ONGARD system. In addition, for Communitizations and unitizations, the system identifies the tract participation of each lease within the PUN. After verification by the SLO's Royalty Management Division, the applicable Royalty Filers are notified of the PUN assignment for the well completion, of the associated State Leases and each lease's tract participation (percent) in the PUN. Each lease's royalty rate is included in the notice.

The Royalty Filer is also notified of any changes to a PUN which effect a Lease's tract participation in the PUN; or of a change in PUN for a State Lease's tract participation.

*1.2.1.2 PUN/Lease exception reports

Get info from Velvet and Linda about these reports etc.

2.0.0 PUN maintenance Activities

2.1.1 Monitor PunEvents TRD300

Process Description

This online process enables the user to monitor the various outstanding PUN events which impact PUN assignment or re-assignment for a well completion; deactivation of a PUN; or assignment/ deactivation of PUN Suffixes. This process also provides "FYI" notification of events which are related PUN, PUN Suffix and PUN Lease, such as, well completion shut-in status, expiration of a state lease, etc. Events captured/monitored include (by category);

"FYI" Events

 04 - C-104 Change in POD (Point of Disposition)

 08 - Well Completion Shut-in, or Temporarily Abandoned

 15 - Formation of Communitization Agreement

 19 - Formation of Unitization Agreement

 24 - C-104 Change in Transporter

 29 - Initial Unit boundaries

 30 - Change in Unit Pools

 31 - Change in PA expansion boundaries

 32 - Change in Unit tract committed status

 33 - Change in Unit Well completion commercial status

PUN Well Completion Assignment or Change in Operator (System suggests alternative.)

 01 - C-104 New Well Completion (Request for Transport)

 02 - C-104 Change in Operator

 03 - C-104 Change in Property Name

 05 - Change in Well Completion Pool

 06 - Change in Well Completion Spacing Unit

 18 - Unitization Subdivision Change

Change in PUN Status (System suggests alternative)

 07 - Well Completion Plugged, or Plugged & Abandoned

 16 - Communitization Agreement Termination

 17 - Communitization Agreement Reinstatement

 20 - Unitization Agreement Termination

 21 - Unitization Agreement Reinstatement

Automatically approved Events(System modifies database)

 09 - Lease Assignment

 10 - Cancelled Lease

 11 - Expired Lease

 13 - Re-instated Lease

 22 - Change in Unit Tract Percentage

 25 - Un-do Lease Assignment

2.1.2 Approve / Deny Auto PUN Events TRD301

Process Description

This on-line process consists of multiple screens which provide the user the capability to accept or deny "automatic" PUN/PUN Suffix/PUN Lease/PUN Beneficiary updates. Theonline processes include:

1) Accept/Deny "Auto" PUN Assignment/Operator Change

PUN Well Completion Assignment or Change in Operator

 01 - C-104 New Well Completion (Request for Transport)

 02 - C-104 Change in Operator

 03 - C-104 Change in Property Name

 05 - Change in Well Completion Pool

 06 - Change in Well Completion Spacing Unit

 18 - Unitization Subdivision Change

2) Accept/Deny PUN Deactivate/Reactivate

Change in PUN Status

 07 - Well Completion Plugged, or Plugged & Abandoned

 16 - Communitization Agreement Termination

 17 - Communitization Agreement Reinstatement

 20 - Unitization Agreement Termination

 21 - Unitization Agreement Reinstatement

2.1.3 Maintain PUN Comments TRD302

Process Description:

This on-line process enables the user to add/view comments/notes on PUN and PUN assignment. The details on the screen will be PUN, date of comment and the comment. The comments will be in free format. The input of comments should be segregated by agency (TRD or SLO) plus an area for comments specifically about the PUN. The user should be able to view the comments from all three sources.

2.1.4 Maintain Production Unit Numbers TRD303

Process Description:

This on-line process provides a facility for the user to manually assign, reassign or deactivate a PUN. On assignment/reassignment of the PUN, the status of the PUN is changed to approved. After assigning the PUN, the user will navigate to another online process for maintaining the PUN/Suffix.

PUN business rules are as follows:

1. PUN type must be "REGLSE" or "STCOMM", or "STUNIT1", or "STUNIT2", or "BLMUNIT" or "UNKNOWN", "BLMCOMM".

2.State lands must not be part of PUN boundaries for PUN types;"BLMUNIT", "'UNKNOWN", "BLMCOMM".

3. Comm. agreement number must be entered only for "STCOMM". Comm. must be active.

4. Unit agreement number must be entered only for "STUNIT1" or "STUNIT2". Unit must be active.

5. If a PUN with same properties exits, the user must be notified but must have override capability.

6. PUN type "UNKNOWN" can be changed to "BLMUNIT" or "BLMCOMM".

7. PUN type "REGLSE" can be changed to "BLMUNIT" or "BLMCOMM", only if state lands not part of PUN boundaries.

8. PUNs are in the “under capture” status until a well completion, unit or comm. is attached to them.

9. Notice is allowed for only active PUN's.

2.1.5 Maintain PUN to Suffix relationship TRD304

Process Description:

This on-line process provides a facility for the user to add or reassign suffixes to PUNs. The process must provide the ability to attach a suffix to a PUN or remove a suffix from a PUN. Both of these transactions are effective dated.

2.1.5.1Maintain Suffix code TRD305

Process Description:

This online process provides the capability to add, modify or deactivate a suffix code. This will be a restrictive function available to TRD supervisors. The land grid in the GIS system must contain the suffix attributes. This will provide the ability to display the land area of each suffix.

2.1.6 Re-AssignMaster Operator for PUN Group TRD305

Process Description:

This process enables the user to reassign the master operator for a PUN group. The user enters the OGRID code for the Master operator and the OGRID code is changed for all the PUNs which belong to the Master operator to be reassigned.

2.1.7 Attach Well Completion to PUNTRD306

Process Description:

This on-line process enables the user to associate a well completion to a PUN. The Well completion properties are compared with PUN properties. If they match, all PUN elements are derived based on pun type rules.

When adding a well completion to a PUN, theproperty ID and pool ID of well completion must match property ID and pool ID of PUN. Also, if the OGRID of the well completion operator is not the same as the Master Operator of the PUN, the OMID for the well completion operator must match the OMID for the PUN Master Operator. Further, if PUN is of unit type, the well completion's ULSTR must be included in the unit and if PUN is of COMM type, the well completion must be in the COMM.

When adding a well completion to a PUN, if PUN is other than COMM or UNIT type and well completion spacing unit contains multiple land types, a warning message will be displayed before confirming the transaction. Initial set of PUN/Suffixes will be established based on well completion spacing unit subdivisions.

2.1.8 Identify PUN Suffix Subdivision TRD307

Process Description:

This on-line process creates associative entries between PUN and Lease allocation and between PUN Suffix and Subdivision. The user input for this process is ULSTR data. When adding a subdivision to a PUN/Suffix, the ULSTR should exist in land grid, with subsurface ownership code matching the land type for the suffix. Subdivisions cannot be added to a PUN/Suffix which is of COMM or UNIT type and involves state land.

Note: Subdivisions would already have been set up in the land grid and these cannot be modified or deleted

2.1.9 Well Completion Inquiryby ULSTRTRD308

Process Description:

This process will provide inquiry on the well information by ULSTR. The information contained in this inquiry will include the following:

- ULSTR

- Operator (OGRID)

- Effective date of Operator

- Land type well is on

- Pool identifier

- County where well is located

- Federal/State/Indian lease number

- PUN

- Property name

- Well product indicator (Oil, Gas, Other)

- Land information (Communized, Unitized etc.)

- Transporter

- Date of first production (mm/yy)

- Date of last production (mm/yy)

1.ULSTR is mandatory. Get all well completions for the given selection criteria from well completion database.

2.For each well completion

Get active PUN, if does not exist get deactivated PUN.

Get PUN details from PUN database.

Get subsurface owner ship and ownership description

Get Well completion volume production from well completion volume database

2.1.10 Inquire PUN Well Completion TRD309

Process Description:

This on line process provides information, on all well completion for a PUN. When user enters a PUN the process will display, for the PUN: API identification, producing property, pool name, ULSTR and point of disposition for well completion.

2.1.11 Inquire Well Completion PUN History TRD310

Process Description:

This on-line process provides inquiry on well completion history. For a given combination of API number and Pool all the associated PUNs, the Property name, the operator, PUN effective date and PUN termination date are displayed.

2.1.12 Inquire PUN History TRD311

Process Description:

This on-line process provides inquiry information on the history of the PUN. The information displayed includes, status of the PUN (active or deactivated), status effective date, operator, Property and Pool history.

2.1.13 Inquire Suffix Tax Ratesand Allocations TRD312

Process Description:

This inquiry process provides information on the allocation percentages and Tax Rates for PUN Suffixes. The information is extracted from the PUN, PUN suffix and tax rate schedule database by accumulating the local funds rates for that suffix.

2.1.14 Inquire Reporting OGRIDS by PUNTRD313