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53	53	STATE OF OKLAHOMA
54	54
55	55	1st Session of the 58th Legislature (2021)
56	56
57	57	SENATE BILL 1003 By: Taylor
58	58
59	59
60	60
61	61
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63	63	AS INTRODUCED
64	64
65	65	An Act relating to oil and gas; amending 52 O.S.
66	66	2011, Section 570.10, as amended by Section 1,
67	67	Chapter 6, O.S.L. 2018 (52 O.S. Supp . 2020, Section
68	68	570.10), which relates to the Production Revenue
69	69	Standards Act; extending time allowed to pay certain
70	70	proceeds; extending time allowed to pay certain
71	71	royalty proceeds; and providing an effective date .
72	72
73	73
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76	76
77	77	BE IT ENACTED BY THE PEOPL E OF THE STATE OF OKLAHOMA:
78	78	SECTION 1. AMENDATORY 52 O.S. 2011, Section 570.10, as
79	79	amended by Section 1, Chapter 6, O.S.L. 2018 (52 O.S. Supp. 2020,
80	80	Section 570.10), is amended to read as follows:
81	81	Section 570.10. A. All proceeds from the sale of production
82	82	shall be regarded as separate and distinct from all other funds of
83	83	any person receiving or holding the same until such time as such
84	84	proceeds are paid to the owners legally entitled thereto. Any
85	85	person holding revenue or procee ds from the sale of production shall
86	86	hold such revenue or proceeds for the benefit of the owners legally
87	87	entitled thereto. Nothing in this subsection shall create an
88	88	express trust.
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140	140	B. Except as otherwise provided in this section:
141	141	1. Proceeds from the sa le of oil or gas production from an oil
142	142	or gas well shall be paid to persons legally entitled thereto:
143	143	a. commencing not later than six (6) nine (9) months
144	144	after the date of firs t sale, and
145	145	b. thereafter not later than the last day of the second
146	146	succeeding month after the end of the month within
147	147	which such production is sold.
148	148	2. Notwithstanding paragraph 1 of this subsection, royalty
149	149	proceeds from the sale of gas production from an oil or gas well
150	150	remitted to the operator pursuant to subsection B of Sectio n 570.4
151	151	of this title shall be paid to persons legally entitled thereto:
152	152	a. commencing not later than six (6) nine (9) months
153	153	after the date of first sale, and
154	154	b. thereafter not later tha n the last day of the third
155	155	succeeding month after the end of the mon th within
156	156	which such production is sold; provided, however, when
157	157	proceeds are received by the operator in its capacity
158	158	as a producing owner, the operator may pay the royalty
159	159	share of such proceeds to the royalty interest owners
160	160	legally entitled thereto at the same time that it pays
161	161	the royalty proceeds received from other producing
162	162	owners for the same production month, but not later
163	163	than the last day of the third succeeding month after
164	164
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215	215	the end of the month within which such production was
216	216	sold.
217	217	3. a. Proceeds from production may be remitted to the
218	218	persons entitled to such proceeds annually for the
219	219	twelve (12) months accumulation of proceeds totaling
220	220	at least Ten Dollars ($10.00) but less th an One
221	221	Hundred Dollars ($100.00). Amounts less than Ten
222	222	Dollars ($10.00) may be held but shall be remitted
223	223	when production ceases or by the payor upon
224	224	relinquishment of payment responsibility.
225	225	b. Proceeds totaling less than One Hundred Dollars
226	226	($100.00) but more than Twenty-five Dollars ($25.00)
227	227	shall be remitted monthly i f requested by the person
228	228	entitled to the proceeds. Amounts less than Ten
229	229	Dollars ($10.00) shall be remitted annually if
230	230	requested by the person entitled to the proceeds.
231	231	c. Before proceeds greater than Twenty -five Dollars
232	232	($25.00) may be accumulated, pay or shall provide
233	233	notice to the person owning interest as defined in
234	234	Section 570.2 of this title, entitled to such proceeds
235	235	that there is an option to be paid monthly for
236	236	proceeds greater than Twenty-five Dollars ($25.00).
237	237	Such notice to the person shall a lso provide
238	238	directions for requesting monthly payment, and
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290	290	constitutes notice to all heirs, successors,
291	291	representatives, and assigns of the person.
292	292	4. Any delay in determining the person s legally entitled to
293	293	proceeds from production caused by unmarketable title shall not
294	294	affect payments to persons whose title is marketable, or that
295	295	portion of a person’s interest which is marketable.
296	296	C. 1. A first purchaser that pays or causes to be paid
297	297	proceeds from production to the producing owner of such production
298	298	or, at the direction of the producing owner, pays or causes to be
299	299	paid royalty proceeds from production to:
300	300	a. the royalty interest owners legally entitled thereto,
301	301	or
302	302	b. the operator of the well,
303	303	shall not thereafter be liable for such proceeds so paid and shall
304	304	have thereby discharged its duty to pay those proceeds on such
305	305	production.
306	306	2. A working interest owner that pays or causes to be paid
307	307	royalty proceeds from production to:
308	308	a. the royalty interest owners legally entitled thereto,
309	309	or
310	310	b. the operator of the well,
311	311	shall not thereafter be liable for such proceeds so paid and shall
312	312	have thereby discharged its duty to pay those proceeds on such
313	313	production.
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365	365	3. An operator that pays or caus es to be paid royalty proceeds
366	366	from production, received by it as ope rator, to the royalty interest
367	367	owners legally entitled thereto shall not thereafter be liable for
368	368	such proceeds so paid and shall have thereby discharged its duty to
369	369	pay those proceeds on such production.
370	370	4. Where royalty proceeds are paid incorrectly as a result of
371	371	an error or omission, the party whose error or omission caused the
372	372	incorrect royalty payments shall be liable for the additional
373	373	royalty proceeds on such production and all re sulting costs or
374	374	damages incurred by the party making the incorrect p ayment.
375	375	D. 1. Except as otherwise provided in paragraph 2 of this
376	376	subsection, where proceeds from the sale of oil or gas production or
377	377	some portion of such proceeds are not paid prior t o the end of the
378	378	applicable time periods provided in this section, th at portion not
379	379	timely paid shall earn interest at the rate of twelve percent (12%)
380	380	per annum to be compounded annually, calculated from the end of the
381	381	month in which such production is so ld until the day paid.
382	382	2. a. Where such proceeds are not paid because the title
383	383	thereto is not marketable, such proceeds shall earn
384	384	interest at the rate of (i) six percent (6%) per annum
385	385	to be compounded annually for time periods prior to
386	386	November 1, 2018, and (ii) the prime interest rate as
387	387	reported in the Wall Street Jour nal for time periods
388	388	on or after November 1, 2018, calculated from the end
389	389
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440	440	of the month in which such production was sold until
441	441	such time as the title to such interest becomes
442	442	marketable or the holder has received an acceptable
443	443	affidavit of death and heirs hip in conformity with
444	444	Section 67 of Title 16 of the Oklahoma Statutes, or as
445	445	set forth in subparagraph b of this paragraph.
446	446	Marketability of title shall be determined in
447	447	accordance with the then current title examination
448	448	standards of the Oklahoma Bar Asso ciation.
449	449	b. Where marketability has remained uncured, or the
450	450	holder has not been provided an acceptable affidavit
451	451	of death and heirship in conformity with Section 67 of
452	452	Title 16 of the Oklahoma Statutes, for a period of one
453	453	hundred twenty (120) days from t he date payment is due
454	454	under this section, any person claiming to own the
455	455	right to receive proceeds which have not been paid
456	456	because of unmarketable title may require the holder
457	457	of such proceeds, or the holder of such proceeds may
458	458	elect, to interplead the proceeds and all accrued
459	459	interest into court for a determination of the persons
460	460	legally entitled thereto. Upon payment into court the
461	461	holder of such proceeds shall be relieved of any
462	462	further liability for the proper payment of such
463	463	proceeds and interest t hereon.
464	464
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515	515	E. 1. Except as provided in paragraph 2 of this subsection, a
516	516	first purchaser or holder of proceeds who fails to remit proceeds
517	517	from the sale of oil or gas production to owners legally entitled
518	518	thereto within the time limitations set forth in par agraph 1 of
519	519	subsection B of this section shall be liable to such owners for
520	520	interest as provided in subsection D of this section on that portion
521	521	of the proceeds not timely paid. When two or more persons fail to
522	522	remit within such time limitations, liabilit y for such interest
523	523	shall be shared by those persons holding the proceeds in proportion
524	524	to the time each person held such proceeds.
525	525	2. When royalty proceeds on gas production are remitte d
526	526	pursuant to subsection B of Section 570.4 of this title:
527	527	a. A first purchaser that causes such proceeds to be
528	528	received by the operator or by a producing owner in
529	529	the well for distribution to the royalty interest
530	530	owner legally entitled thereto within the first month
531	531	following the month in which such production was sold
532	532	shall not be liable for interest on such proceeds.
533	533	b. A producing owner receiving royalty proceeds that
534	534	causes such proceeds to be received by the royalty
535	535	interest owner legally entitled the reto or by the
536	536	operator for distribution to the royalty interest
537	537	owner legally entitled thereto not later than the end
538	538	of the first month following the month in which
539	539
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590	590	proceeds for such production was received by the
591	591	producing owner from the purchaser shall not be liable
592	592	for interest on such proceeds.
593	593	c. An operator receivin g royalty proceeds that causes
594	594	such proceeds to be received by the royalty interest
595	595	owner legally entitled thereto, not later than the end
596	596	of the first month following the month in which
597	597	proceeds for such production was received by the
598	598	operator from the pu rchaser or producing owner, shall
599	599	not be liable for interest on such proceeds.
600	600	d. Liability for interest provided in subsection D of
601	601	this section shall be borne solely by the person, or
602	602	persons, failing to remit royalty proceeds within the
603	603	time limitations set forth in subsection B of this
604	604	section. When two or more persons fail to remit
605	605	within such time limitations, liability for such
606	606	interest shall be shared by such persons in proportion
607	607	to the time each person held such proceeds.
608	608	F. Nothing in this sect ion shall be construed to impair or
609	609	amend existing or future contractual rights provided for in gas
610	610	balancing agreements or other written agreements which expressly
611	611	provide for the taking , sharing, marketing or balancing of gas or
612	612	the proceeds therefrom. Any proceeds to be paid pursuant to any
613	613	such agreement shall not commence to earn interest until the sooner
614	614
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665	665	of the time provided in such agreement for the payment of such
666	666	proceeds or ninety (90) days from the date of the depletion of the
667	667	well. Nothing herein shall be deemed to alter or limit the payment
668	668	of royalty proceeds as provided in the Production Revenue Standards
669	669	Act.
670	670	G. All payments under the Production Revenue Standards Act to
671	671	owners or any other person or governmental entity legally entitled
672	672	to the payment may be made by electronic means including but not
673	673	limited to electronic funds transfer, Automated Clearing House
674	674	(ACH), direct deposit, wire transfer, or any other similar for m of
675	675	transfer, upon the mutual written consent of the payor and payee .
676	676	SECTION 2. This act shall become effective November 1, 2021.
677	677
678	678	58-1-1078 APW 1/21/2021 8:49:11 PM

Oklahoma 2022 Regular Session

Oklahoma Senate Bill SB1003 Compare Versions