HLS 13RS-315 ORIGINAL
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
Regular Session, 2013
HOUSE BILL NO. 564
BY REPRESENTATIVE JIM MORRIS
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
MINERALS: Provides relative to drilling units
AN ACT1
To amend and reenact R.S. 30:10(A)(2)(b)(ii)(cc), (ee), and (ff) and (iii), and to enact R.S.2
30:10(A)(2)(b)(ii)(gg), relative to drilling units; to provide for the agreements for3
drilling units; to provide for pooling interests; to provide for the election to4
participate in a unit well; to provide for the recovery of certain costs; to provide for5
payment to certain royalty owners; to provide for judicial remedies; to require certain6
information relating to drilling units; and to provide for related matters.7
Be it enacted by the Legislature of Louisiana:8
Section 1. R.S. 30:10(A)(2)(b)(ii)(cc), (ee), and (ff) and (iii) are hereby amended and9
reenacted and R.S. 30:10(A)(2)(b)(ii)(gg) is hereby enacted to read as follows:10
ยง10. Agreements for drilling units; pooling interests; terms and conditions; expenses11
A.12
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(2)14
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(b)16
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(ii)18
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HB NO. 564
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(cc) The share that is to be received by the nonparticipating owner on behalf1
of its lessor royalty owner and or overriding royalty owner shall be reported by the2
drilling owner in accordance with Part 2-B of Chapter 13 of Title 31 of the Louisiana3
Revised Statutes of 1950. If the nonparticipating owner has not previously paid its4
royalty and overriding royalty owners, then any share of production received by the5
nonparticipating owner from the drilling owner shall at all times be owned by the6
respective royalty and overriding royalty owners while in the possession of the7
nonparticipating owner.8
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(ee) In the event of nonpayment by the nonparticipating owner of the royalty10
and overriding royalty due, the lessor royalty owner and overriding royalty owner11
shall provide written notice of such failure to the nonparticipating owner and drilling12
owner as a prerequisite to a judicial demand for damages. The lessor royalty owner13
and overriding royalty owner shall follow the same procedure and have the same14
remedies provided in Part 6 of Chapter 7 of Title 31 of the Louisiana Revised15
Statutes of 1950 or Part 2-A of Chapter 13 of Title 31 of the Louisiana Revised16
Statutes of 1950, respectively, against the nonparticipating owner and the drilling17
owner. If the drilling owner provides sufficient proof of payment of the royalties to18
the nonparticipating owner, then the lessor royalty owner and overriding royalty19
owner shall have no cause of action against the drilling owner for nonpayment. In20
such a judicial demand against the nonparticipating owner, the lessor royalty owner21
or overriding royalty owner may also seek a judgment directing the drilling owner22
to make any payments not previously made, and any future payments due to the23
nonparticipating owner under Subitems (aa) and (bb) of this Item directly to the24
lessor royalty owner or overriding royalty owner or into the registry of the court25
upon a showing that such a judgment is necessary to protect the interests of the lessor26
royalty owner or overriding royalty owner because its remedies against the27
nonparticipating owner are inadequate to do justice.28 HLS 13RS-315 ORIGINAL
HB NO. 564
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are additions.
(ff) In the event of nonpayment by the drilling owner of the royalty and1
overriding royalty due to the nonparticipating owner for the benefit of the lessor2
royalty owner and overriding royalty owner, and payment by the nonparticipating3
owner of the royalty and overriding royalty due of the amounts due under Subitems4
(aa) and (bb) of this Item, the nonparticipating owner shall provide written notice of5
such failure to pay to the drilling owner as a prerequisite to a judicial demand for6
damages. The drilling owner shall have thirty days after receipt of the required7
notice within which to pay the royalties due or to respond in writing by stating a8
reasonable cause for nonpayment. If the drilling owner fails to make payment of the9
royalties or fails to state a reasonable cause for nonpayment as determined by the10
court within this period, the court may award to the nonparticipating owner as11
damages double the amount of royalties due an amount not to exceed the greater of12
either fifty percent of the amount due or an amount equal to that portion of the13
damages awarded by the court to the lessor royalty owner or overriding royalty14
owner against the nonparticipating owner under Subitem (ee) of this Item which are15
attributable to the nonpayment by the drilling owner, interest on that sum from the16
date due, and a reasonable attorney fee regardless of the cause for the original failure17
to pay royalties. If the drilling owner provides sufficient proof of payment of the18
royalties to the nonparticipating owner, then the nonparticipating owner shall have19
no cause of action against the drilling owner for nonpayment successfully defends20
such a judicial demand by the nonparticipating owner, the court may award to the21
drilling owner a reasonable attorney fee for defending that demand.22
(gg) During the recovery of the actual reasonable expenditures incurred in23
drilling, testing, completing, equipping, and operating the well, the charge for24
supervision, and the risk charge, the drilling owner shall provide the information25
described in R.S. 30:103.1(A) to any person subject to the risk charge who makes a26
written request for this information to the drilling owner.27
(iii) Any owner not notified shall bear only his tract's allocated share of the28
actual reasonable expenditures incurred in drilling, testing, completing, equipping,29 HLS 13RS-315 ORIGINAL
HB NO. 564
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and operating the unit well, including a charge for supervision, which share shall be1
subject to the same obligation and remedies and rights to own and recover out of2
production in favor of the drilling party or parties as provided in this Subsection. A3
participating drilling owner shall deliver to the owner whom has not been notified4
the proceeds attributable to his royalty and overriding royalty burdens as described5
in this Section.6
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DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Jim Morris HB No. 564
Abstract: Provides for payments by drilling owners to nonparticipating owners for the
benefit of royalty owners and overriding royalty owners.
Present law requires a drilling owner to report payment information in accordance with
present law when paying a nonparticipating owner the share due his lessor royalty owner and
overriding royalty owner . Proposed law retains present law.
Proposed law provides that if a nonparticipating owner has not previously paid its royalty
and overriding royalty owners, then any share of production received by the nonparticipating
owner from the drilling owner shall at all times be owned by the respective royalty and
overriding royalty owners while in the possession of the nonparticipating owner.
Present law provides for judicial remedies for the lessor royalty owner and overriding
royalty owner in the event the nonparticipating owner fails to pay the royalty and overriding
royalties due, after providing written notice to the nonparticipating owner and drilling owner.
Proposed law retains present law.
Present law provides that there is no cause of action against a drilling owner that provides
sufficient proof of payment of the royalty and overriding royalty to the nonparticipating
owner. Proposed law removes present law.
Proposed law provides that in an action against the nonparticipating owner, the lessor royalty
owner or overriding royalty owner may seek a judgment directing the drilling owner to make
any royalty and overriding royalty payments directly to the lessor royalty owner or
overriding royalty owner or into the registry of the court upon a showing that such a
judgment is necessary.
Present law provides for judicial remedies for the nonparticipating owner against the drilling
owner in the event the drilling owner fails to pay the royalty or overriding royalty due, after
providing written notice to the drilling owner and a 30 day opportunity to provide written
cause for the failure. Proposed law retains present law.
Present law provides that the court may award the nonparticipating owner in an action
against the drilling owner double the amount of royalties due, plus interest and a reasonable
attorney fee. HLS 13RS-315 ORIGINAL
HB NO. 564
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are additions.
Proposed law retains the interest and the attorney fee award in present law and replaces the
damages of double the royalties due with an amount not to exceed the greater of: 50% the
amount due or an amount equal to that portion of the damages awarded by the court to the
lessor royalty owner or overriding royalty owner in their action against the nonparticipating
owner.
Proposed law provides that the drilling owner may be awarded a reasonable attorney fee if
he successfully defends such a judicial demand by the nonparticipating owner.
Proposed law provided that during the recovery of the actual reasonable expenditures
incurred in drilling, testing, completing, equipping, and operating the well, the charge for
supervision, and the risk charge, the drilling owner shall provide the information required
to be given to an unleased owners as provided in present law to any person subject to the risk
charge and makes a written request for this information to the drilling owner.
Present law provides that owner that did not receive the notice of the opportunity to
participate in the unit well, substitute unit well, alternate unit well, or cross-unit well is only
responsible for the costs of the well which shall be recovered from the owner's share of
production in favor of the drilling owner. Proposed law retains present law.
Present law provides that a participating owner shall deliver to the owner that has not been
notified the proceeds attributable to his royalty and overriding royalty burdens. Proposed
law changes participating owner to drilling owner.
(Amends R.S. 30:10(A)(2)(b)(ii)(cc), (ee), and (ff), and (iii); Adds R.S. 30:10(A)(2)(b)
(ii)(gg))