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ENGROSSED HOUSE
BILL NO. 1371 By: Boles of the House
and
Green of the Senate
[ oil and gas - payment of proceeds - Production
Revenue Standard Act - undeliverable - uncashed –
interest - effective date ]
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 52 O.S. 2021, Section 570.10, is
amended to read as follows:
Section 570.10. A. All proceeds from the sale of production
shall be regarded as separate and distinct from all other funds o f
any person receiving or holding the same until such time as such
proceeds are paid to the owners legally entitled thereto. Any
person holding revenue or proceeds from the sale of production shall
hold such revenue or proceeds for the benefit of the owne rs legally
entitled thereto. Nothing in this subsection shall create an
express trust.
B. Except as otherwise provided in this section:
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1. Proceeds from the sale of oil or gas production from an oil
or gas well shall be paid to persons legally entitled thereto:
a. commencing not later than six (6) months after the
date of first sale, and
b. thereafter not later than the last day of the second
succeeding month after the end of the month within
which such production is sold.
2. Notwithstanding paragraph 1 of this subsection, royalty
proceeds from the sale of gas production from an oil or gas well
remitted to the operator pursuant to subsection B of Section 570.4
of this title shall be paid to persons legally entitled thereto:
a. commencing not later than s ix (6) months after the
date of first sale, and
b. thereafter not later than the last day of the third
succeeding month after the end of the month within
which such production is sold; provided, however, when
proceeds are received by the operator in its ca pacity
as a producing owner, the operator may pay the royalty
share of such proceeds to the royalty interest owners
legally entitled thereto at the same time that it pays
the royalty proceeds received from other producing
owners for the same production mon th, but not later
than the last day of the third succeeding month after
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the end of the month within which such production was
sold.
3. a. Proceeds from production may be remitted to the
persons entitled to such proceeds annually for the
twelve (12) months accumulation of proceeds totaling
at least Ten Dollars ($10.00) but less than One
Hundred Dollars ($100.00). Amounts less than Ten
Dollars ($10.00) may be held but shall be remitted
when production ceases or by the payor upon
relinquishment of payment res ponsibility.
b. Proceeds totaling less than One Hundred Dollars
($100.00) but more than Twenty -five Dollars ($25.00)
shall be remitted monthly if requested by the person
entitled to the proceeds. Amounts less than Ten
Dollars ($10.00) shall be remitted an nually if
requested by the person entitled to the proceeds.
c. Before proceeds greater than Twenty -five Dollars
($25.00) may be accumulated, payor shall provide
notice to the person owning interest as defined in
Section 570.2 of this title, entitled to suc h proceeds
that there is an option to be paid monthly for
proceeds greater than Twenty -five Dollars ($25.00).
Such notice to the person shall also provide
directions for requesting monthly payment, and
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constitutes notice to all heirs, successors,
representatives, and assigns of the person.
4. Any delay in determining the persons legally entitled to
proceeds from production caused by unmarketable title shall not
affect payments to persons whose title is marketable, or that
portion of a person's interest which is marketable.
C. 1. A first purchaser that pays or causes to be paid
proceeds from production to the producing owner of such production
or, at the direction of the producing owner, pays or causes to be
paid royalty proceeds from production to:
a. the royalty interest owners legally entitled thereto,
or
b. the operator of the well,
shall not thereafter be liable for such proceeds so paid and shall
have thereby discharged its duty to pay those proceeds on such
production.
2. A working interest owner t hat pays or causes to be paid
royalty proceeds from production to:
a. the royalty interest owners legally entitled thereto,
or
b. the operator of the well,
shall not thereafter be liable for such proceeds so paid and
shall have thereby discharged its duty to pay those proceeds on such
production.
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3. An operator that pays or causes to be paid royalty proceeds
from production, received by it as operator, to the royalty interest
owners legally entitled thereto shall not thereafter be liable for
such proceeds so paid and shall have thereby discharged its duty to
pay those proceeds on such production.
4. Where royalty proceeds are paid incorrectly as a result of
an error or omission, the party whose error or omission caused the
incorrect royalty payments shall be liable for the additional
royalty proceeds on such production and all resulting costs or
damages incurred by the party making the incorrect payment.
D. 1. Except as otherwise provided in paragraph 2 of this
subsection, where proceeds from the sale of oil or gas production or
some portion of such proceeds are not paid prior to the end of the
applicable time periods provided in this section, that portion not
timely paid shall earn interest at the rate of twelve percent (12%)
per annum to be compounded an nually, calculated from the end of the
month in which such production is sold until the day paid.
2. a. Where such proceeds are not paid because the title
thereto is not marketable, such proceeds shall earn
interest at the rate of (i) six percent (6%) per annum
to be compounded annually for time periods prior to
November 1, 2018, and (ii) the prime interest rate as
reported in the Wall Street Journal for time periods
on or after November 1, 2018, calculated from the end
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of the month in which such production was sold until
such time as the title to such interest becomes
marketable or the holder has received an acceptable
affidavit of death and heirship in conformity with
Section 67 of Title 16 of the Oklahoma Statutes, or as
set forth in subparagraph b of thi s paragraph.
Marketability of title shall be determined in
accordance with the then current title examination
standards of the Oklahoma Bar Association.
b. Where marketability has remained uncured, or the
holder has not been provided an acceptable affidavi t
of death and heirship in conformity with Section 67 of
Title 16 of the Oklahoma Statutes, for a period of one
hundred twenty (120) days from the date payment is due
under this section, any person claiming to own the
right to receive proceeds which have n ot been paid
because of unmarketable title may require the holder
of such proceeds, or the holder of such proceeds may
elect, to interplead the proceeds and all accrued
interest into court for a determination of the persons
legally entitled thereto. Upon payment into court the
holder of such proceeds shall be relieved of any
further liability for the proper payment of such
proceeds and interest thereon.
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c. Where such proceeds are not paid because the physical
payment check was returned to the payor operator as
undeliverable or the physical payment check is never
cashed by the royalty owner, such proceeds shall not
earn interest after the date the physical payment
check was mailed. The payor operator shall maintain
records of such mailing dates and copies of any
undeliverable envelopes and physical payment checks.
This provision shall only apply to physical payment
checks mailed to an address provided by such royalty
owner to the payor operator .
E. 1. Except as provided in paragraph 2 of this subsection, a
first purchaser or holder of proceeds who fails to remit proceeds
from the sale of oil or gas production to owners legally entitled
thereto within the time limitations set forth in paragraph 1 of
subsection B of this section shall be liable to such owners for
interest as provided in subsection D of this section on that portion
of the proceeds not timely paid. When two or more persons fail to
remit within such time limitations, liability for su ch interest
shall be shared by those persons holding the proceeds in proportion
to the time each person held such proceeds.
2. When royalty proceeds on gas production are remitted
pursuant to subsection B of Section 570.4 of this title:
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a. A first purchaser that causes such proceeds to be
received by the operator or by a producing owner in
the well for distribution to the royalty interest
owner legally entitled thereto within the first month
following the month in which such production was sold
shall not be liable for interest on such proceeds.
b. A producing owner receiving royalty proceeds that
causes such proceeds to be received by the royalty
interest owner legally entitled thereto or by the
operator for distribution to the royalty interest
owner legally entitled thereto not later than the end
of the first month following the month in which
proceeds for such production was received by the
producing owner from the purchaser shall not be liable
for interest on such proceeds.
c. An operator receiving royalt y proceeds that causes
such proceeds to be received by the royalty interest
owner legally entitled thereto, not later than the end
of the first month following the month in which
proceeds for such production was received by the
operator from the purchaser or producing owner, shall
not be liable for interest on such proceeds.
d. Liability for interest provided in subsection D of
this section shall be borne solely by the person, or
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persons, failing to remit royalty proceeds within the
time limitations set for th in subsection B of this
section. When two or more persons fail to remit
within such time limitations, liability for such
interest shall be shared by such persons in proportion
to the time each person held such proceeds.
F. Nothing in this section shal l be construed to impair or
amend existing or future contractual rights provided for in gas
balancing agreements or other written agreements which expressly
provide for the taking, sharing, marketing or balancing of gas or
the proceeds therefrom. Any proc eeds to be paid pursuant to any
such agreement shall not commence to earn interest until the sooner
of the time provided in such agreement for the payment of such
proceeds or ninety (90) days from the date of the depletion of the
well. Nothing herein shal l be deemed to alter or limit the payment
of royalty proceeds as provided in the Production Revenue Standards
Act.
G. All payments under the Production Revenue Standards Act to
owners or any other person or governmental entity legally entitled
to the payment may be made by electronic means including but not
limited to electronic funds transfer, Automated Clearing House
(ACH), direct deposit, wire transfer, or any other similar form of
transfer, upon the mutual written consent of the payor and payee.
SECTION 2. This act shall become effective November 1, 2025.
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Passed the House of Representatives the 26th day of March, 2025.
Presiding Officer of the House
of Representatives
Passed the Senate the _____ day of __________ , 2025.
Presiding Officer of the Senate