|
|
|
A BILL TO BE ENTITLED
|
|
AN ACT
|
|
relating to the allocation of production from a horizontal |
|
drainhole oil or gas well to an owner of a nonparticipating royalty |
|
interest in production from the well. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
SECTION 1. Subchapter J, Chapter 91, Natural Resources |
|
Code, is amended by adding Section 91.409 to read as follows: |
|
Sec. 91.409. ALLOCATION OF PRODUCTION FROM HORIZONTAL |
|
DRAINHOLE WELL TO OWNER OF NONPARTICIPATING ROYALTY INTEREST. (a) |
|
This section does not apply to: |
|
(1) a unit formed under Chapter 102; or |
|
(2) an interest owned by this state. |
|
(b) A payee who owns a nonparticipating royalty interest in |
|
a tract that has been penetrated by a horizontal drainhole well for |
|
oil, gas, or both oil and gas and who has not ratified a lease or |
|
pooling agreement covering the tract is entitled to be paid the |
|
payee's allocated share of the proceeds derived from the sale of oil |
|
or gas production from the well based on the ratio of the length of |
|
the portion of the horizontal drainhole between the first take |
|
point and the last take point of the horizontal drainhole that |
|
crosses the tract in which the payee owns the nonparticipating |
|
royalty interest to the total length of the horizontal drainhole |
|
between the first take point and the last take point of the |
|
horizontal drainhole. A payor who pays such a payee based on the |
|
allocation method provided by this section is presumed to have |
|
accurately attributed production to the payee's interest. |
|
(c) A payor or payee to whom this section applies may rebut |
|
the presumption that the allocation method provided by this section |
|
accurately attributes production to the payee's nonparticipating |
|
royalty interest by obtaining a final order of the commission |
|
establishing another method of allocation of production to the |
|
payee's interest. The payor or payee may obtain such an order only |
|
after application, notice to each payee owning an interest in the |
|
tract that is subject to the nonparticipating royalty interest and |
|
the payor, and an opportunity for a hearing. The commission may |
|
establish an alternate method of allocation only on a showing by |
|
clear and convincing evidence that the method is more accurate in |
|
attributing production to the payee's interest than the method |
|
provided by Subsection (b). The commission has exclusive primary |
|
jurisdiction over such a determination. |
|
SECTION 2. This Act applies only to the allocation of |
|
production from a horizontal drainhole oil or gas well that is |
|
spudded on or after the effective date of this Act. The allocation |
|
of production from a horizontal drainhole oil or gas well that is |
|
spudded before the effective date of this Act is governed by the law |
|
as it existed immediately before the effective date of this Act, and |
|
that law is continued in effect for that purpose. |
|
SECTION 3. This Act takes effect immediately if it receives |
|
a vote of two-thirds of all the members elected to each house, as |
|
provided by Section 39, Article III, Texas Constitution. If this |
|
Act does not receive the vote necessary for immediate effect, this |
|
Act takes effect September 1, 2011. |