Oil and gas division and transfer orders.

2017
STATE OF WYOMING
17LSO-0268
Introduced
1.3

HOUSE BILL

NO.

HB0178

Oil and gas division and transfer orders.

Sponsored by:
Representative(s) Walters and Miller and Senator(s) Von Flatern

A BILL

for

AN ACT relating to oil and gas production; providing requirements related to division and transfer orders; providing a penalty; and providing for effective dates.

Be It Enacted by the Legislature of the State of Wyoming:

Section 1
.

W.S.
30
‑
5
‑
303 by creating a new subsection (d)
,
30
‑
5
‑
3
04(
a) by creating a new p
aragraph (
i
x)
and by renumbering (ix) as (x)
and 30
‑
5
‑
305
(a) and
by creating new subsection
s
(c)
through
(
h
)
are amended to read:

30
‑
5
‑
303
.

Payment for production; penalty for violation; jurisdiction; costs and fees.

(d)

If the party responsible for sending any division order to an interest owner
pursuant to W.S. 30
‑
5
‑
305(c)
fails to send the division order in accordance with
that subsection
, that party is liable to the interest owner in the amount of o
ne hundred dollars ($100.00) for each
month that the division order is
not provided to the interest owner
subsequent to the payment due date
.

30
‑
5
‑
304
.

Definitions.

(a)

As used in this act:

(
i
x)

"Commission" means the Wyoming oil
and gas conservation commission;

(ix)
(x)

"This act" means W.S. 30
‑
5
‑
301 through 30
‑
5
‑
305.

30
‑
5
‑
305
.

Collection; reporting and remittance of royalties
; division and transfer orders
.

(a)

Unless otherwise expressly provided for by specific language in an executed written agreement, "royalty", "overriding royalty", "other nonworking interests" and "working interests" shall be interpreted as defined in W.S. 30
‑
5
‑
304.
A division order may not alter or amend the terms of
an oil
or gas lease or other contractual agreement. A division order that alters or amends the terms of an oil and gas lease or other contractual agreement is invalid to the extent of the alteration or amendment and the terms of the oil and gas lease or other contractual agreement shall take precedence.

(c)

Effective July 1, 2017, before the date on which payment is due
and, when applicable, subsequent to any transfer
by assignment, sale
or other disposition of ownership interest
,

a
lessee
,
operator or other party legally responsible for payment

for oil or gas production
shall
send
a division order to all interest owners
. A division order
shall
not alter or amend the terms of
an oil
or gas lease or other contractual agreement. A division order that alters or amends the terms of an oil
or
gas lease or other contractual agreement is invalid to the
extent of the alteration or amendm
ent
,
and the terms of the oil or
gas lease or other contractual agreement shall take precedence.

(d)

The division order required
by
subsection (c) of this section shall be on a form
available through the
commission
. The division order
shall
provide
the following
information
:

(i)

All

interest owners
'

name
s and
address
es
;

(ii)

A
legal
description
and name
of the property from which the oil or gas is being produced
,
the type of production
and, if applicable, the lease number
;

(i
ii
)

The interest owner's type of interest;

(iv)

A
ll
interest owners'
respective
percentage
s
of ownership totaling one hundred percent (100%)
of
the ownership

interests
subject to the division order
;

(
v
)

The authorization to suspend payment to the interest owner
for production
u
ntil any title di
spute or adverse claim
regarding the interest claimed by the interest owner is resolved

or
for
failure to sign and return the division order pursuant to subsecti
on (e) of this section;

(
v
i
)

A
provision requiring
the interest owner
to
provide notice

of any change in the interest owner's interest in production
by sending a copy of the county recorded transfer instrument to the party responsible for sending division orders
;

(v
ii
)

Provisions for the valuation and timing of settlements of
oil or
gas production to the interest owner;

(
viii
)

The effective date of the division order;

(
i
x)

Any other terms necessary to facilitate the transaction.

(
e
)

I
f
, within sixty (60) days of the date of issuance,

the interest owner
fails to
sign
and

return
the division order

and
does not provide written notice disputing any material information
contained in
the division order
,
the party responsible for sending the division order shall
resend the division order to the interest owner
via signature required mail service
.
If
, within thirty (30) days of the date of second issuance,
the interest owner fails to sign and return the division order

and

does not provide written notice disputing any material information
contained in
the division order
, the party responsible for sending the division order
shall

cause a notice of the division order to be published once a week for four (4) consecutive weeks in a newspaper of general circulation in the county in which the production

is located
.

If, after providing
such
notice by publication of the division
order
, the interest owner fails to sign and return the division order

and
does not provide written notice dispu
ting any material information contained in
the division order
, the party responsible for sending the division order shall deposit all proceeds credited to the interest owner to an escrow account
in accordance with W.S.
30
‑
5
‑
302
. If the escrow agent is unable to deliver the payment to the
interest owner
within three (3) years from the end of the month in which
the proceeds were deposited into the escrow account
, the payment shall be considered unclaimed for purposes of W.S. 34
‑
24
‑
101 through 34
‑
24
‑
139. Applicable escrow fees shall be deducted from the payments.

(
f
)

Any delay caused by an interest owner's failure to sign and re
turn
the division order shall not affect payments to all other interest owners entitled to payment.

(
g
)

Effective
July 1, 2017,
unless otherwise provided by

an oil or gas lease or other contractual agreement
,
if

an
interest owner provide
s

notice of
any
change in
the interest owner's
interest
in production
by sending a copy of the county recorded transfer instrument
to the party responsible for sending division orders for the production
that party shall send to all interest owners a
n
amended or corrected division order
on a form
available through the
commission.

(h)

Effective July 1, 2017, unless otherwise provided by an oil or gas lease or other contractual agreement, if there is a change in the party legally responsible for payment for oil or gas production, the new responsible party shall issue a transfer order to all interest owners in the property. The transfer order shall advise that the responsibility
for distributing payments for production has been transferred to the new party, who shall make payments pursuant to existing division orders. A transfer order shall be on a form available through the commission.

Section 2
.

The Wyoming oil and gas conservation commission
shall pr
escribe the forms for division orders and transfer orders by
July 1
, 2017
.

Section
3
.

(a)

Except as provided in subsection (b) of this section, t
his act is effective
July 1, 2017
.

(b)

Sec
tion 2 of this act is effective
immediately upon completion of all acts necessary for a bill to become law as provided by Article 4, Section 8 of the Wyoming Constitution
.

(END)

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HB0178