1-1 By: Craddick (Senate Sponsor - Brown) H.B. No. 1593
1-2 (In the Senate - Received from the House April 21, 1995;
1-3 April 24, 1995, read first time and referred to Committee on
1-4 Natural Resources; May 3, 1995, reported favorably by the following
1-5 vote: Yeas 9, Nays 0; May 3, 1995, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to payment for the proceeds of oil or gas production.
1-9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10 SECTION 1. Sections 91.402(d) and (f), Natural Resources
1-11 Code, are amended to read as follows:
1-12 (d) In the alternative, the provisions of Subsection (c) of
1-13 this section may be satisfied by a division order for oil payments
1-14 in substantially the following form and content:
1-15 DIVISION ORDER
1-16 TO: (Payor) Property No.
1-17 ______________________________ ______________________________
1-18 ______________________________ ______________________________
1-19 ______________________________ Effective
1-20 (Date)
1-21 The undersigned severally and not jointly certifies it is the
1-22 legal owner of the interest set out below of all the oil and
1-23 related liquid hydrocarbons produced from the property described
1-24 below:
1-25 OPERATOR:
1-26 Property name:
1-27 County: State:
1-28 Legal Description:
1-29 ------------------------------------------------------------------
1-30 OWNER NO. TAX I.D./SOC. SEC. NO. PAYEE
1-31 DIVISION OF INTEREST
1-32 ------------------------------------------------------------------
1-33 ------------------------------------------------------------------
1-34 THIS AGREEMENT DOES NOT AMEND ANY LEASE OR OPERATING
1-35 AGREEMENT BETWEEN THE INTEREST OWNERS AND THE LESSEE OR OPERATOR OR
1-36 ANY OTHER CONTRACTS FOR THE PURCHASE OF OIL OR GAS.
1-37 The following provisions apply to each interest owner
1-38 ("owner") who executes this agreement:
1-39 TERMS OF SALE: The undersigned will be paid in accordance
1-40 with the division of interests set out above. The payor shall pay
1-41 all parties at the price agreed to by the operator for oil to be
1-42 sold pursuant to this division order. Purchaser shall compute
1-43 quantity and make corrections for gravity and temperature and make
1-44 deductions for impurities.
1-45 PAYMENT: From the effective date, payment is to be made
1-46 monthly by payor's check, based on this division of interest, for
1-47 oil run during the preceding calendar month from the property
1-48 listed above, less taxes required by law to be deducted and
1-49 remitted by payor as purchaser. Payments of less than $100 <$25>
1-50 may be accrued before disbursement until the total amount equals
1-51 $100 <$25> or more, or until 12 months' proceeds accumulate
1-52 <December 31 of each year>, whichever occurs first. However, the
1-53 payor may hold accumulated proceeds of less than $10 until
1-54 production ceases or the payor's responsibility for making payment
1-55 for production ceases, whichever occurs first. Payee agrees to
1-56 refund to payor any amounts attributable to an interest or part of
1-57 an interest that payee does not own.
1-58 INDEMNITY: The owner agrees to indemnify and hold payor
1-59 harmless from all liability resulting from payments made to the
1-60 owner in accordance with such division of interest, including but
1-61 not limited to attorney fees or judgments in connection with any
1-62 suit that affects the owner's interest to which payor is made a
1-63 party.
1-64 DISPUTE; WITHHOLDING OF FUNDS: If a suit is filed that
1-65 affects the interest of the owner, written notice shall be given to
1-66 payor by the owner together with a copy of the complaint or
1-67 petition filed.
1-68 In the event of a claim or dispute that affects title to the
2-1 division of interest credited herein, payor is authorized to
2-2 withhold payments accruing to such interest, without interest
2-3 unless otherwise required by applicable statute, until the claim or
2-4 dispute is settled.
2-5 TERMINATION: Termination of this agreement is effective on
2-6 the first day of the month that begins after the 30th day after the
2-7 date written notice of termination is received by either party.
2-8 NOTICES: The owner agrees to notify payor in writing of any
2-9 change in the division of interest, including changes of interest
2-10 contingent on payment of money or expiration of time.
2-11 No change of interest is binding on payor until the recorded
2-12 copy of the instrument of change or documents satisfactorily
2-13 evidencing such change are furnished to payor at the time the
2-14 change occurs.
2-15 Any change of interest shall be made effective on the first
2-16 day of the month following receipt of such notice by payor.
2-17 Any correspondence regarding this agreement shall be
2-18 furnished to the addresses listed unless otherwise advised by
2-19 either party.
2-20 In addition to the legal rights provided by the terms and
2-21 provisions of this division order, an owner may have certain
2-22 statutory rights under the laws of this state.
2-23 Signature of Social Security/
2-24 Witness Interest Owner Tax I.D. No. Address
2-25 _____________ ______________ ______________ ______________
2-26 _____________ ______________ ______________ ______________
2-27 _____________ ______________ ______________ ______________
2-28 Failure to furnish your Social Security/Tax I.D. number will
2-29 result in <20 percent> withholding tax in accordance with federal
2-30 law, and any tax withheld will not be refundable by payor.
2-31 (f) Payment <Payments> may be remitted to a payee <payees>
2-32 annually for the aggregate of up to 12 months' accumulation of
2-33 proceeds<,> if the payor owes the payee a total amount of $100
2-34 <owed is $25> or less for production from all oil or gas wells for
2-35 which the payor must pay the payee. However, the payor may hold
2-36 accumulated proceeds of less than $10 until production ceases or
2-37 the payor's responsibility for making payment for production
2-38 ceases, whichever occurs first. On the written request of the
2-39 payee, the payor shall remit payment of accumulated proceeds to the
2-40 payee annually if the payor owes the payee less than $10. On the
2-41 written request of the payee, the payor shall remit payment of
2-42 proceeds to the payee monthly if the payor owes the payee more than
2-43 $25 but less than $100.
2-44 SECTION 2. The importance of this legislation and the
2-45 crowded condition of the calendars in both houses create an
2-46 emergency and an imperative public necessity that the
2-47 constitutional rule requiring bills to be read on three several
2-48 days in each house be suspended, and this rule is hereby suspended,
2-49 and that this Act take effect and be in force from and after its
2-50 passage, and it is so enacted.
2-51 * * * * *