| 1 | 1 | | 84R8720 SMH-F |
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| 2 | 2 | | By: Fraser S.B. No. 919 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to oil and gas wells that traverse multiple tracts. |
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| 8 | 8 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 9 | 9 | | SECTION 1. Section 85.046, Natural Resources Code, is |
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| 10 | 10 | | amended by adding Subsection (d) to read as follows: |
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| 11 | 11 | | (d) Unless expressly prohibited by a lease, deed, or other |
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| 12 | 12 | | contract, an operator or lessee with the right to drill an oil or |
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| 13 | 13 | | gas well on or produce or develop oil or gas from each tract |
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| 14 | 14 | | independently may, under a permit issued by the commission, drill, |
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| 15 | 15 | | operate, and produce oil or gas from an oil or gas well that |
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| 16 | 16 | | traverses multiple tracts in order to prevent waste, promote |
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| 17 | 17 | | conservation, or protect correlative rights. If there is not an |
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| 18 | 18 | | agreement among any of the affected owners of royalty or mineral |
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| 19 | 19 | | interests in the tracts regarding the manner in which production |
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| 20 | 20 | | from the well shall be allocated among the tracts, the production |
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| 21 | 21 | | shall be allocated to each tract in the proportion that the operator |
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| 22 | 22 | | or lessee reasonably determines reflects the amount produced from |
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| 23 | 23 | | each tract. The operator or lessee must send written notice of the |
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| 24 | 24 | | production allocation to each affected royalty or mineral interest |
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| 25 | 25 | | owner at the owner's last known address. If an owner of a royalty or |
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| 26 | 26 | | mineral interest in a tract enters into an agreement with the |
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| 27 | 27 | | operator or lessee regarding the manner in which production from |
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| 28 | 28 | | the well shall be allocated to the tract, the agreement prevails |
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| 29 | 29 | | over the allocation determined by the operator or lessee under this |
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| 30 | 30 | | subsection. On application of an affected person, the commission, |
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| 31 | 31 | | after notice and opportunity for hearing, may determine whether a |
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| 32 | 32 | | production allocation under this subsection: |
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| 33 | 33 | | (1) will harm the correlative rights of the working or |
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| 34 | 34 | | royalty interest owners; |
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| 35 | 35 | | (2) is necessary to prevent waste or adequately |
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| 36 | 36 | | protect the correlative rights of the affected owners; and |
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| 37 | 37 | | (3) accurately attributes to each affected interest |
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| 38 | 38 | | owner its fair share of the aggregated production. |
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| 39 | 39 | | SECTION 2. If any provision of this Act or its application |
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| 40 | 40 | | to any person or circumstance is held invalid, the invalidity does |
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| 41 | 41 | | not affect other provisions or applications of this Act that can be |
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| 42 | 42 | | given effect without the invalid provision or application, and to |
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| 43 | 43 | | this end the provisions of this Act are declared to be severable. |
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| 44 | 44 | | SECTION 3. This Act takes effect immediately if it receives |
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| 45 | 45 | | a vote of two-thirds of all the members elected to each house, as |
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| 46 | 46 | | provided by Section 39, Article III, Texas Constitution. If this |
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| 47 | 47 | | Act does not receive the vote necessary for immediate effect, this |
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| 48 | 48 | | Act takes effect September 1, 2015. |
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