Bill Text: TX HB2087 | 2011-2012 | 82nd Legislature | Comm Sub
Bill Title: 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.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2011-04-14 - Committee report sent to Calendars [HB2087 Detail]
Download: Texas-2011-HB2087-Comm_Sub.html
82R17252 SMH-F | |||
By: Craddick | H.B. No. 2087 | ||
Substitute the following for H.B. No. 2087: | |||
By: J. Davis of Harris | C.S.H.B. No. 2087 |
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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. |