Bill Text: OH HB528 | 2011-2012 | 129th General Assembly | Introduced
Bill Title: To require the lessee of an oil and gas lease to provide to the lessor monthly oil and gas production statements, to specify the minimum information that must be included in a monthly statement, and to establish procedures and requirements in accordance with which a lessor may conduct an audit of the lessee's records and documents related to production or post-production costs under the lease.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2012-05-01 - To Agriculture & Natural Resources [HB528 Detail]
Download: Ohio-2011-HB528-Introduced.html
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Representatives Carney, Okey
| To enact section 1509.081 of the Revised Code to | 1 |
| require the lessee of an oil and gas lease to | 2 |
| provide to the lessor monthly oil and gas | 3 |
| production statements, to specify the minimum | 4 |
| information that must be included in a monthly | 5 |
| statement, and to establish procedures and | 6 |
| requirements in accordance with which a lessor may | 7 |
| conduct an audit of the lessee's records and | 8 |
| documents related to production or post-production | 9 |
| costs under the lease. | 10 |
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
| Section 1. That section 1509.081 of the Revised Code be | 11 |
| enacted to read as follows: | 12 |
| Sec. 1509.081. (A) The lessee of an oil and gas lease that is | 13 |
| necessary for the formation of a drilling unit in which is located | 14 |
| a well and all applicable assignees, lessees, and | 15 |
| successors-in-interest shall provide to the lessor a statement | 16 |
| each month during which the lease is in effect. The statement | 17 |
| shall contain at least all of the following: | 18 |
| (1) An identification of the lease, the property that is the | 19 |
| subject of the lease, or the well that is located in the drilling | 20 |
| unit that was formed in whole or in part with the lease; | 21 |
| (2) The nature of the royalty clause in the lease; | 22 |
| (3) The lessor's royalty interest under the lease expressed | 23 |
| in decimals; | 24 |
| (4) The period for which the lessee, assignee, or | 25 |
| successor-in-interest is paying royalties to the lessor; | 26 |
| (5) The identity of each product on which the lessee, | 27 |
| assignee, or successor-in-interest is paying royalties. In | 28 |
| addition, the statement shall include the grade, quality, or other | 29 |
| applicable classification of each product. | 30 |
| (6) A separate listing of the total volume of each product on | 31 |
| which the lessee, assignee, or successor-in-interest is paying | 32 |
| royalties; | 33 |
| (7) The price or value on which the lessee, assignee, or | 34 |
| successor-in-interest calculates the royalty payments; | 35 |
| (8) The total amount of severance taxes, production taxes, | 36 |
| windfall profit taxes, and other taxes paid on the lessor's share | 37 |
| of the production; | 38 |
| (9) The accounting method used to determine each royalty | 39 |
| payment. In addition, if the lessee, assignee, or | 40 |
| successor-in-interest uses a workback accounting method, the | 41 |
| statement shall include the nature and amount of each expense that | 42 |
| was deducted in determining the royalty payments. | 43 |
| (10) The lessor's share of the total value or price of the | 44 |
| production before and after any deductions; | 45 |
| (11) The amount of the royalty payment; | 46 |
| (12) The name and address of all entities to which the | 47 |
| lessee, assignee, or successor-in-interest sold or otherwise | 48 |
| transferred any product for the immediately preceding month; | 49 |
| (13) If any product was sold or otherwise transferred to more | 50 |
| than one entity in the immediately preceding month, a separate | 51 |
| indication of the amount of oil, gas, condensate, and liquid | 52 |
| hydrocarbon, as applicable, that was sold or otherwise transferred | 53 |
| to each entity; | 54 |
| (14) The address and telephone number of the lessee, | 55 |
| assignee, or successor-in-interest that the lessor may use to | 56 |
| contact the lessee, assignee, or successor-in-interest with | 57 |
| questions regarding royalty payments; | 58 |
| (15) If no production occurred in the immediately preceding | 59 |
| month, the reason for the lack of production. | 60 |
| (B)(1) For the purpose of conducting an audit, the lessor of | 61 |
| an oil and gas lease that is necessary for the formation of a | 62 |
| drilling unit in which is located a well or the lessor's agent may | 63 |
| request the lessee or the lessee's employees, officers, | 64 |
| accountants, attorneys, or other agents to provide a copy of any | 65 |
| and all records and documents that are related to the exploration, | 66 |
| production, processing, sale, marketing, taxes, gathering, | 67 |
| dehydration, compression, transportation, treatment, or other | 68 |
| post-production costs for any product resulting from the well. Not | 69 |
| later than thirty days after receipt of a request for such records | 70 |
| and documents, the lessee and the lessee's employees, officers, | 71 |
| accountants, attorneys, and other agents shall provide to the | 72 |
| lessor or the lessor's agent all relevant records and documents | 73 |
| requested. | 74 |
| (2) If the lessee of an oil and gas lease that is necessary | 75 |
| for the formation of a drilling unit in which is located a well | 76 |
| receives a request for records and documents from the lessor | 77 |
| pursuant to division (B)(1) of this section, the lessee | 78 |
| immediately shall send to each entity to which the lessee sold or | 79 |
| otherwise transferred any product resulting from the well a | 80 |
| written document that instructs and authorizes the entity to | 81 |
| provide to the lessor or the lessor's authorized agent all records | 82 |
| and documents that are related to the sale or transfer that are in | 83 |
| the possession of the entity or the entity's employees, | 84 |
| accountants, attorneys, or other agents. | 85 |
| In addition, the lessee immediately shall send a written | 86 |
| document to all applicable taxing authorities that instructs and | 87 |
| authorizes each such taxing authority to provide to the lessor or | 88 |
| the lessor's authorized agent all records and documents regarding | 89 |
| taxes levied on, paid by, or refunded to the lessee or to the | 90 |
| lessee's assignees, successors-in-interest, or agents. If a taxing | 91 |
| authority does not accept the written document as sufficient | 92 |
| authorization for release of the tax information, the lessee shall | 93 |
| execute any additional documents that are necessary for that | 94 |
| taxing authority to provide tax information to the lessor or the | 95 |
| lessor's authorized agent. | 96 |
| (3) A written document required under division (B)(2) of this | 97 |
| section shall include both of the following: | 98 |
| (a) A statement that the authorization to provide all records | 99 |
| and documents to the lessor does not expire; | 100 |
| (b) A statement that the lessee waives all legal claims or | 101 |
| causes of action for the provision of records and documents to the | 102 |
| lessor. | 103 |
| (4) A lessee or the lessee's assignee or | 104 |
| successor-in-interest, as applicable, shall provide a copy of each | 105 |
| written document that is prepared pursuant to division (B)(2) of | 106 |
| this section to all subsequent assignees and | 107 |
| successors-in-interest. | 108 |
| (C) As used in this section, "product" means oil, gas, | 109 |
| condensate, and liquid hydrocarbon. | 110 |
