This presentation was prompted by the recent revisions to the Risk Charge Statute  contained in Louisiana Revised Statutes 30:10, by Act 5 of the Regular Session of the Louisiana Legislature of 2022 (“Act 5”).  A copy of the pertinent provisions of La RS 30:10, as revised by Act 5, is attached to the paper with the Act 5 changes redlined. 

In order to understand the Risk Charge Statute, it is helpful to review the history of its evolution and the related jurisprudence.  It began as a limited “free-rider” statute to discourage block busting for individual units, and had limited and occasional use.  It was never intended to address comprehensively the relationship of all of the owners in a unit.  Rather it has been amended, tweaked, and expanded, as necessary and as issues have arisen.  

Given the nature of the development of the Haynesville Shale play, the rush to acquire and assemble large amounts of acreage as quickly as possible, the existence in some instances of acreage held by shallow production, the rush to drill wells and develop acreage and sales, acquisitions and other transfers of acreage positions, the Risk Charge Statute has become in large part the vehicle used to facilitate operations where there are different owners of leases in a unit and/or with unleased owners.  The volume of units and wells to be developed and drilled, the time and manpower constraints and the variety of bargaining positions, among other factors, by and large did not lend themselves to the orderly assembly of acreage and negotiation of operating agreements that had previously been the case with other plays.  With the evolution of the Risk Charge Statute and the development of the Haynesville Shale play, the use of the Risk Charge Statute has largely become, and not necessarily in a negative way, the story of “the tail wagging the dog.” 
The unleased and other owner reporting requirements of La. RS 30: 103.1 and 103.2 also play an important role and are discussed below as well.