(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:
| If your lease is . . . | Then . . . | And . . . |
|---|---|---|
| (1) Not in an agreement | The lease must qualify as a marginal property under paragraph (b) of this section | |
| (2) Entirely or partly committed to one agreement | The entire agreement must qualify as a marginal property under paragraph (b) of this section | Agreement production allocable to your lease may be eligible for relief under this 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 table. |
| (3) Entirely or partly committed to more than one agreement | Each agreement must qualify separately as a marginal property under paragraph (b) of this section | For any agreement that does qualify, that agreement's production allocable to your 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 table. |
| (4) Partly committed to an agreement and you have production from the part of the lease that is not committed to the agreement | The part of the lease that is not committed to the agreement must 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.
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