Texas House Bill HB2882

Texas 2021 - 87th Regular

Caption

Relating to information provided to a payee by a payor of proceeds of production from an oil or gas well that traverses multiple tracts.

Impact

The provisions outlined in HB2882 are expected to significantly improve the information transparency related to proceeds from oil and gas production. By mandating the inclusion of an as-drilled plat and a clear allocation formula in division orders, the bill directs payors to provide comprehensive data that ensures payees can understand how production is divided. This change can lead to a more informed and potentially more equitable distribution of produced resources, benefitting all parties involved.

Summary

House Bill 2882 introduces amendments to the Natural Resources Code regarding the information provided to payees by payors of proceeds from oil and gas well productions that extend across multiple tracts. The primary modification requires that for horizontal wells, the payor must include an as-drilled plat of the well and provide a detailed explanation of the formula used for allocating production between various tracts when issuing division orders. This aims to enhance transparency and clarity for stakeholders involved in oil and gas production.

Contention

While the bill aims to standardize the communication between payors and payees, there could be points of contention surrounding the implementation of the allocation formula and what constitutes sufficient detail in the provided documents. Concerns may arise regarding the complexity of the allocation formula, the potential for disputes among payees if the information is unclear, and whether the financial implications of this amendment could influence the operational dynamics between payor entities and stakeholders. Overall, discussions may center around balancing regulatory requirements with operational efficiency.