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 |