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A BILL TO BE ENTITLED
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AN ACT
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relating to security interests in oil and gas production and its |
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proceeds. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 9.301, Business & Commerce Code, is |
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amended to read as follows: |
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Sec. 9.301. LAW GOVERNING PERFECTION AND PRIORITY OF |
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SECURITY INTERESTS. In this section, "first purchaser" and "oil |
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and gas production" have the meanings assigned by Section 9.343(r). |
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Except as otherwise provided in Sections 9.303 through 9.306, the |
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following rules determine the law governing perfection, the effect |
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of perfection or nonperfection, and the priority of a security |
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interest in collateral: |
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(1) Except as otherwise provided in this section, |
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while a debtor is located in a jurisdiction, the local law of that |
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jurisdiction governs perfection, the effect of perfection or |
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nonperfection, and the priority of a security interest in |
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collateral. |
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(2) While collateral is located in a jurisdiction, the |
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local law of that jurisdiction governs perfection, the effect of |
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perfection or nonperfection, and the priority of a possessory |
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security interest in that collateral. |
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(3) Except as otherwise provided in Subdivision (4), |
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while tangible negotiable documents, goods, instruments, money, or |
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tangible chattel paper is located in a jurisdiction, the local law |
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of that jurisdiction governs: |
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(A) perfection of a security interest in the |
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goods by filing a fixture filing; |
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(B) perfection of a security interest in timber |
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to be cut; and |
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(C) the effect of perfection or nonperfection and |
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the priority of a nonpossessory security interest in the |
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collateral. |
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(4) The local law of the jurisdiction in which the |
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wellhead or minehead is located governs perfection, the effect of |
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perfection or nonperfection, and the priority of a security |
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interest in as-extracted collateral. The local law of the |
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jurisdiction in which the wellhead or minehead is located, |
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including, if applicable, the provisions of Section 9.343(b) that |
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provide for the automatic perfection of a security interest, govern |
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the perfection of a security interest against the first purchaser, |
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regardless of the jurisdiction in which the first purchaser is |
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organized, for oil and gas production owned by, received by, or due |
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to the first purchaser and in the identifiable proceeds of that |
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production owned by, received by, or due to the first purchaser, if |
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the proceeds are oil or gas production, inventory of raw, refined, |
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or manufactured oil or gas production, or rights to or products of |
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any of those. |
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(5) For a purchase-money security interest against the |
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first purchaser of oil and gas production or its proceeds, Sections |
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9.324(b) and 9.343(f) govern the priority of the purchase-money |
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security interest, regardless of: |
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(A) the jurisdiction in which the first purchaser |
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is organized; or |
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(B) whether the purchase-money security interest |
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was perfected by filing a financing statement, if the |
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purchase-money security interest was also perfected automatically |
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under Section 9.343(b). |
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SECTION 2. Subsections (b) and (c), Section 9.324, Business & |
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Commerce Code, are amended to read as follows: |
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(b) In this subsection, "first purchaser," "oil and gas |
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production," and "subsequent purchaser" have the meanings assigned |
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by Section 9.343(r). The provisions of this subsection apply |
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regardless of the jurisdiction in which the first purchaser is |
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organized. Subject to Subsection (c) and except as otherwise |
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provided in Subsection (g), a perfected purchase-money security |
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interest in inventory has priority over a conflicting security |
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interest in the same inventory, has priority over a conflicting |
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security interest in chattel paper or an instrument constituting |
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proceeds of the inventory and in proceeds of the chattel paper, if |
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so provided in Section 9.330, and, except as otherwise provided in |
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Section 9.327, also has priority in identifiable cash proceeds of |
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the inventory to the extent the identifiable cash proceeds are |
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received on or before the delivery of the inventory to a buyer or, |
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in the case of identifiable cash proceeds from oil and gas |
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production or its proceeds, to the extent the identifiable cash |
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proceeds are owned by, received by, or due to the first purchaser on |
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or before the delivery of the inventory to a subsequent purchaser, |
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if: |
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(1) the purchase-money security interest is perfected |
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automatically under Section 9.343(b) or in another authorized |
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manner when the debtor receives possession of the inventory; |
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(2) except where excused by Section 9.343 (oil and gas |
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production), the purchase-money secured party sends an |
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authenticated notification to the holder of the conflicting |
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security interest; |
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(3) the holder of the conflicting security interest |
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receives any required notification within five years before the |
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debtor receives possession of the inventory; and |
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(4) the notification, if notification is required, |
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states that the person sending the notification has or expects to |
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acquire a purchase-money security interest in inventory of the |
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debtor and describes the inventory. |
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(c) Subsections (b)(2)-(4) apply only if the holder of the |
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conflicting security interest had filed a financing statement |
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covering the same types of inventory: |
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(1) before the date of the filing, if the |
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purchase-money security interest is perfected only by filing, and |
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is not also perfected automatically under Section 9.343(b) [before
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the date of the filing]; or |
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(2) if the purchase-money security interest is |
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temporarily perfected without filing or possession under Section |
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9.312(f), before the beginning of the 20-day period under that |
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subsection. |
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SECTION 3. Section 9.343, Business & Commerce Code, is |
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amended by amending Subsections (c), (f), and (g) and adding |
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Subsection (k-1) to read as follows: |
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(c) The security interest exists in oil and gas production |
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owned by, received by, or due to the first purchaser[,] and [also] |
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in the identifiable proceeds of that production owned by, received |
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by, or due to the first purchaser: |
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(1) for an unlimited time if: |
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(A) the proceeds are oil or gas production, |
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inventory of raw, refined, or manufactured oil or gas production, |
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or rights to or products of any of those, although the sale of those |
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proceeds to a subsequent [by a first] purchaser [to a buyer in the
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ordinary course of business as provided in Subsection (e)] cuts off |
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the security interest in those proceeds; |
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(B) the proceeds are accounts, chattel paper, |
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instruments, documents, or payment intangibles; or |
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(C) the proceeds are cash proceeds, as defined in |
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Section 9.102; and |
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(2) for the length of time provided in Section 9.315 |
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for all other proceeds. |
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(f) The security interests and all liens created by this |
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section have the following priorities over other Chapter 9 security |
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interests: |
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(1) A security interest created by this section, |
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whether perfected automatically under Subsection (b) or perfected |
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by the filing of the optional financing statement authorized by |
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Section 9.5055, is treated as a purchase-money security interest |
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for purposes of determining its relative priority under Section |
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9.324 over other security interests not provided for by this |
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section. A holder of a security interest created under this section |
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is not required to give the written notice every five years as |
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provided in Section 9.324(b)(3) to have purchase-money priority |
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over a security interest with a prior financing statement covering |
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inventory. |
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(2) A statutory lien is subordinate to all other |
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perfected Chapter 9 security interests and has priority over |
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unperfected Chapter 9 security interests and the lien creditors, |
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buyers, and transferees mentioned in Section 9.317. |
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(g) The security interests and liens created by this section |
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have the following priorities among themselves: |
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(1) Regardless of whether the optional financing |
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statement authorized by Section 9.5055 was filed to perfect those |
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security interests, if [If] a record effective as a filed financing |
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statement under Subsection (b) exists, the security interests |
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perfected by that record have priority over a security interest |
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automatically perfected without filing under Subsection (b). If |
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several security interests perfected by records exist, they have |
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the same priority among themselves as established by real property |
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law for interests in oil and gas in place. If real property law |
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establishes no priority among them, they share priority pro rata. |
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(2) A security interest perfected automatically |
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without filing under Subsection (b), or for which the optional |
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financing statement authorized by Section 9.5055 was filed, if the |
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security interest was also perfected automatically without filing |
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under Subsection (b), has priority over a lien created under |
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Subsection (d). |
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(3) A nontax lien under Subsection (d) has priority |
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over a lien created under that subsection that secures the payment |
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of taxes. |
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(k-1) The sale to a subsequent purchaser by the first |
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purchaser of oil and gas production or the proceeds of that |
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production, if the proceeds are oil or gas production, inventory of |
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raw, refined, or manufactured oil or gas production, or rights to or |
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products of any of those, cuts off the liens and security interests |
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created by this section in the oil and gas production and its |
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proceeds. The security interests and liens created by this section |
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are subject to and do not impair or impact in any manner the |
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exercise or enforcement by a subsequent purchaser of any rights, |
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including rights of a secured creditor and rights of set-off, |
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net-out, exchange, recoupment, or withholding of funds, provided |
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under any enforceable contract or applicable law that governs the |
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relationship between a subsequent purchaser and the first purchaser |
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or an affiliate or representative of the first purchaser. |
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SECTION 4. Subsection (r), Section 9.343, Business & |
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Commerce Code, is amended by adding Subdivision (5) to read as |
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follows: |
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(5) "Subsequent purchaser" means a person who is not |
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an affiliate of the first purchaser and who purchases from the first |
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purchaser or affiliate or representative of the first purchaser oil |
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and gas production or the proceeds of that production, if the |
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proceeds are oil or gas production, inventory of raw, refined, or |
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manufactured oil or gas production, or rights to or products of any |
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of those. |
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SECTION 5. Subchapter E, Chapter 9, Business & Commerce |
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Code, is amended by adding Section 9.5055 to read as follows: |
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Sec. 9.5055. OPTIONAL FINANCING STATEMENT FOR SECURITY |
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INTEREST IN OIL AND GAS PRODUCTION AND ITS PROCEEDS. (a) In this |
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section, "first purchaser," "interest owner," "operator," and "oil |
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and gas production" have the meanings assigned by Section 9.343(r). |
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(b) To the extent of a conflict between this section and |
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another provision of this subchapter, this section prevails. |
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(c) If a security interest in oil and gas production or its |
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proceeds is perfected automatically under Section 9.343(b), an |
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interest owner or an operator acting on behalf of one or more |
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interest owners may also, but is not required to, file a financing |
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statement against the first purchaser in the jurisdiction in which |
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the first purchaser is organized. |
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(d) A financing statement filed pursuant to this section is |
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sufficient if it: |
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(1) provides the name of the debtor; |
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(2) provides the name of the secured party or a |
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representative of the secured party; and |
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(3) indicates the collateral covered by the financing |
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statement. |
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SECTION 6. Subsections (e), (m), and (n), Section 9.343, |
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Business & Commerce Code, are repealed. |
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SECTION 7. The changes in law made by this Act apply only to |
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a civil action commenced on or after the effective date of this Act. |
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A civil action commenced before the effective date of this Act is |
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governed by the law in effect immediately before the effective date |
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of this Act, and that law is continued in effect for that purpose. |
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SECTION 8. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2013. |