HBA-LJP, EDN H.B. 981 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 981
By: King, Tracy
Energy Resources
2/16/2001
Introduced



BACKGROUND AND PURPOSE 

Under current law, certain information must accompany monthly royalty
checks for proceeds derived from the sale of oil or gas production.  This
information often does not contain enough detail and it is difficult for
royalty owners to determine whether or not they are being paid correctly.
House Bill 981 provides that additional information be included with the
monthly royalty check. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 981 amends the Natural Resources Code to provide that each check
stub or attachment to a payment form to a royalty interest owner (owner)
for proceeds derived from the sale of oil or gas production must include,
in addition to existing requirements: 

_each county and the state in which the lease, property, or well is located;

_the total number of gallons of each type of natural gas liquid sold;

_the Btu factor for gas sold;

_the price per gallon of each type of natural gas liquid sold;

_the amount and purpose of any other deduction or adjustment, including any
deduction for compression, dehydration, treatment, marketing, or
transportation; and 

_the gross production during the month for which payment is being made, if
more than one person makes payments. 

H.B. 981 requires that a person who made a payment to an owner during the
preceding calendar year provide the owner a report, not later than January
31st of each year, listing each well for which the person made a payment to
the owner during that year including the lease, property, unit and well
identification number, the API number, and the legal description of the
property on which the well is located.  The bill does nor require a person
to provide such a report if the person paid the owner less than $100 during
the preceding calendar year.  An owner is authorized to bring an action for
an injunction to compel a person making a payment to comply with these
provisions and is also authorized to recover court costs and reasonable
attorney's fees. 

EFFECTIVE DATE

On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001.