SB576 SFA Ferns 3-26 #2

Heath 7879

Senator Ferns moved to amend the bill on pages four and five, section four, lines one through twenty-nine, by striking out all of subsection (a) and inserting in lieu thereof two new subsections, designated subsections (a) and (b), to read as follows:

(a) If after a reasonable effort to negotiate by the operator with all royalty owners in an oil and gas mineral property, tenants in common, joint tenants or coparceners representing three fourths of the royalty interest in the oil and gas mineral property consent to a lawful use of the mineral property, then that use is permissible, is not waste and is not trespass.  In that case, the consenting cotenants and their lessees, operators, agents, contractors or assigns are not liable for damages, provided that:

(1) They pay nonconsenting cotenants in accordance with subsection (b) of this section; and

(2) They reserve in a trust account held for the benefit of unknown or unlocatable interest owners in a state or federally insured financial institution any amounts entitled to such unknown and unlocatable interest owners pursuant to the calculations of subsection (b). 

(b) A nonconsenting cotenant is entitled to receive a lease bonus payment calculated on a net mineral acre basis, and a production royalty, to be free of post-production expenses, both of which shall be calculated as follows:

(1) Based on the highest rate received by his or her consenting cotenants in the same mineral property if the same oil and gas mineral property was subject to oil and gas leases between the operator and at least three fourths of the royalty interest in the oil and gas mineral property prior to the effective date of this chapter; or

(2) Based on the average amount paid to such consenting cotenants for the tract if the same oil and gas mineral property was subject to oil and gas leases between the operator and less than three fourths of the royalty interest in the oil and gas mineral property prior to the effective date of this chapter. 

Adopted

Rejected