Texas 2011 - 82nd Regular

Texas House Bill HB2087 Compare Versions

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Old	New	Differences
1	1	82R17252 SMH-F
2	2	By: Craddick H.B. No. 2087
3	3	Substitute the following for H.B. No. 2087:
4	4	By: J. Davis of Harris C.S.H.B. No. 2087
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the allocation of production from a horizontal
10	10	drainhole oil or gas well to an owner of a nonparticipating royalty
11	11	interest in production from the well.
12	12	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	13	SECTION 1. Subchapter J, Chapter 91, Natural Resources
14	14	Code, is amended by adding Section 91.409 to read as follows:
15	15	Sec. 91.409. ALLOCATION OF PRODUCTION FROM HORIZONTAL
16	16	DRAINHOLE WELL TO OWNER OF NONPARTICIPATING ROYALTY INTEREST. (a)
17	17	This section does not apply to:
18	18	(1) a unit formed under Chapter 102; or
19	19	(2) an interest owned by this state.
20	20	(b) A payee who owns a nonparticipating royalty interest in
21	21	a tract that has been penetrated by a horizontal drainhole well for
22	22	oil, gas, or both oil and gas and who has not ratified a lease or
23	23	pooling agreement covering the tract is entitled to be paid the
24	24	payee's allocated share of the proceeds derived from the sale of oil
25	25	or gas production from the well based on the ratio of the length of
26	26	the portion of the horizontal drainhole between the first take
27	27	point and the last take point of the horizontal drainhole that
28	28	crosses the tract in which the payee owns the nonparticipating
29	29	royalty interest to the total length of the horizontal drainhole
30	30	between the first take point and the last take point of the
31	31	horizontal drainhole. A payor who pays such a payee based on the
32	32	allocation method provided by this section is presumed to have
33	33	accurately attributed production to the payee's interest.
34	34	(c) A payor or payee to whom this section applies may rebut
35	35	the presumption that the allocation method provided by this section
36	36	accurately attributes production to the payee's nonparticipating
37	37	royalty interest by obtaining a final order of the commission
38	38	establishing another method of allocation of production to the
39	39	payee's interest. The payor or payee may obtain such an order only
40	40	after application, notice to each payee owning an interest in the
41	41	tract that is subject to the nonparticipating royalty interest and
42	42	the payor, and an opportunity for a hearing. The commission may
43	43	establish an alternate method of allocation only on a showing by
44	44	clear and convincing evidence that the method is more accurate in
45	45	attributing production to the payee's interest than the method
46	46	provided by Subsection (b). The commission has exclusive primary
47	47	jurisdiction over such a determination.
48	48	SECTION 2. This Act applies only to the allocation of
49	49	production from a horizontal drainhole oil or gas well that is
50	50	spudded on or after the effective date of this Act. The allocation
51	51	of production from a horizontal drainhole oil or gas well that is
52	52	spudded before the effective date of this Act is governed by the law
53	53	as it existed immediately before the effective date of this Act, and
54	54	that law is continued in effect for that purpose.
55	55	SECTION 3. This Act takes effect immediately if it receives
56	56	a vote of two-thirds of all the members elected to each house, as
57	57	provided by Section 39, Article III, Texas Constitution. If this
58	58	Act does not receive the vote necessary for immediate effect, this
59	59	Act takes effect September 1, 2011.