Texas Senate Bill SB817

Texas 2019 - 86th Regular

Caption

Relating to the information required to be provided by a payor of the proceeds derived from the sale of oil or gas production to a royalty interest owner.

Impact

If enacted, SB817 would modify Section 91.502 of the Natural Resources Code to specify the type of information payors must include in their payment documentation. The additional information required will not only aid royalty interest owners in understanding their earnings but could also facilitate better tracking of payments received, thus impacting financial practices in the oil and gas sector. Given the complexity often associated with oil and gas transactions, these changes aim to benefit all parties involved by eliminating ambiguity around payment figures and ensuring that owners are well-informed.

Summary

Senate Bill 817 relates to the information that must be provided by payors of proceeds derived from the sale of oil or gas production to royalty interest owners. The bill seeks to enhance transparency in the financial reporting associated with oil and gas production by ensuring that essential information is included in payment documentation. This is aimed at providing royalty owners with a clearer understanding of their earnings and the factors influencing them. The proposed changes will require detailed breakdowns of sales, taxes paid, and any adjustments made, essentially making financial dealings more transparent for stakeholders involved in oil and gas production.

Contention

Although the necessity for transparency in financial reporting is generally well-accepted, the effectiveness of the bill may hinge on how it is implemented in practice. Potential points of contention could arise regarding the costs incurred by payors to adopt streamlined reporting practices, as well as how the additional information will be assessed by royalty interest owners. Critics may argue that while transparency is vital, the burden of greater documentation could be an unwelcome additional obligation for smaller operators within the industry. This balance of transparency against operational efficiency may spark discussions during legislative review.