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NADOA N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s G R O W T H T H R O U G H E D U C T I O N

Volume MMXIX • No 4

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NADOA 2019 Officers President Jason Lucas 1st Vice President Luanne Johnson, CDOA 2nd Vice Presiden t Lewis Box, CDOA Treasurer Jeff Kliewer, CDOA Corresponding Secretary Jennifer Lujano Recording Secretary Michelle Harris, CDOA The NADOA News Magazine is a quarterly publication of the National Association of Division

Contents Feature

Articles

Legal Update – North Dakota........................................ 5 Legislative Update – Texas.............................................. 8 Unclaimed Property Updates........................................ 10

In This

Issue

Order Analysts PO Box 44009 Denver CO 80201

President’s Corner. .................................................1 Decimal Points.......................................................2 Certification...........................................................3 2020 Institute.........................................................4 2019 NADOA Board/Committee Chairs...............21 Calendar of Events. ..............................................23

Subscription: By membership to NADOA, at $75.00 per year. News Magazine Editor Rona L. Erickson, CDOA Kaiser-Francis Oil Company Ronae@KFOC.net 918.491.4319 Associate Editor

April Luedecke, CDOA aprilluedecke@yahoo.com

Graphic Design Paul Beach

On the Cover: Fort Worth Omni Hotel

All rights reserved. No part of this publication may be reproduced/copied without written permission. Editorial disclaimer: The contents of this newsletter are intended for member use only and any other use without permission from the NADOA Board of Directors is strictly prohibited.Articles published herein represent the view of the authors; publication neither implies approval of the opinions expressed nor accuracy of the facts stated and NADOA accepts no liability for misprints.

President’s

Corner

Jason Lucas 2019 NADOA President

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We’re integrating industry leading land and accounting systems to deliver the best in class field-to-finance solution.

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If you have a suggestion for someone to act as a Regional Reporter to help NADOA keep abreast of current legislation and legal issues for your region, please submit the name or the name of the firm.

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VENDORS

CUSTOMERS

OWNERS

First Quarter........................February 14

NAME RECORDS

Second Quarter. .........................May 15

LESSEES

LEASE COST CENTER

Special Institute Edition. .............July 10

LEASES

Third Quarter. .......................August 21

INVOICES

PAYMENTS

ACCOUNTSPAYABLE

Fourth Quarter................. November 13

ACCOUNTSRECEIVABLE

PAYMENTSTATUSUPDATES COMMON IDsONLESSEES+OWNERS

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CANDIDATES FOR CERTIFICATION Publication of the following “Certified Division Order Analyst” applicant(s) fulfills the requirement as stated in the Voluntary Certification Policy, III C.2 which states: “… applicant’s name will be published in the NADOA Newsletter or other official publication of NADOA.” This allows the NADOA membership an opportunity to present objections to the certification of the applicant. Any objection to the certification of the applicant must be in writing and signed by a NADOA member or non-member who qualifies his knowledge and objection of the applicant. All such letters will be considered confidential and must be received by the NADOA Certification Committee at the following address within thirty (30) days following the last day of the month in which the Newsletter or other official publication of NADOA was published NADOA Certification Committee P O Box 44009 Denver CO 80201 If the objection warrants denial of the certification or temporary withholding of certification, the applicant will be notified by Certified Mail.

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If you are a CDOA whose certification expires January 1, 2020, you should receive your Re-Certification Application electronically by the end of January. If you do not receive your Application, please contact Darryn McGee, CDOA at dmcgee@protege-energy.com. TIME TO RECERTIFY?

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2019 CERTIFICATION COMMITTEE

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Lewis Box, CDOA

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Testing

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Policies

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Range Resources

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NADOA 2020 ANNUAL EDUCATIONAL INSTITUTE Hilton – Shreveport, LA September 23 – 25, 2020

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Legal

Update These materials reflect only the personal views of the author and are not individualized legal advice. It is understood that each case is fact-specific, and that the appropriate solution in any case will vary. Therefore, these

materials may or may not be relevant to any particular situation. Thus, the author and their law firm cannot be bound either philosophically or as representatives of their various present and future clients to the comments expressed in these materials. The presentation of these materials does not establish any form of attorney-client relationship with the author or their law firm. While every attempt was made to insure that these materials are accurate, errors or omissions may be contained therein, for which any liability is disclaimed. North Dakota North Dakota Supreme Court Concludes that a Pugh Clause Controls over the Habendum and Continuous Drilling Clauses

In Robert Post Johnson & A.V.M., Inc. v. Statoil Oil & Gas LP, 918 N.W.2d 58 (N.D. 2018), the North Dakota Supreme Court interpreted an oil and gas lease to resolve a conflict between the habendum and continuous drilling clauses and the Pugh clause. The habendum and continuous development clauses were part of a form oil and gas lease and the parties

separately negotiated a Pugh clause that was added to the lease. At the expiration of the three-year primary term, production in paying quantities was occurring in only three of eight units that included lands covered by the disputed lease. The Plaintiffs argued that the Pugh clause terminated the lease as to the lands within

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the five non-producing units upon expiration of the three-year primary term. The Defendants asserted that the lease remained in force and effect as to the five non-producing units due to continuous drilling operations. The Court explained that the general rule is that “an oil and gas lease is indivisible by its nature.” Id., at 61. However, a Pugh clause severs the oil and lease “from units where drilling operations or production are not occurring [, but] to make a lease divisible, the Pugh clause must be clear and explicit.” Id., at 61- 62. In Johnson, the Pugh clause provided: “Notwithstanding anything to the contrary, on expiration of the primary term of the lease, the lease shall terminate as to any part of the property not included within a well unit or units, as established by appropriate regulating authority, from which oil or gas is being produced in paying quantities and shall also terminate as to 100’ below geologic

strata or formations from which production has not occurred during the primary term.”

Id ., at 60-61. The Defendants argued that the continuous drilling operations provision saved the portions of the lease included within the five units that were not producing in paying quantities based upon the North Dakota Supreme Court’s decision in Egeland v. Cont’l Res., Inc., 616 N.W.2d 861 (N.D. 2000) (concluding that “because the Pugh clause was silent to the method of extension, no conflict existed regarding the Pugh clause’s interaction with the habendum and continuous drilling operations clauses of the lease”). The Court distinguished Egeland because the Pugh clause in Johnson specifically stated that “the lease will terminate at the expiration of the primary term for any part of the property not included within a well unit from which oil or gas is being produced in paying quantities.” The absence of any language in the Pugh clause to incorporate or reference the habendum or continuous drilling clause was fatal to Defendants argument that the lease was

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About the Authors:

maintained by continuous drilling operations.

Eli Kiefaber Eli Kiefaber is a partner with Kiefaber & Oliva LLP. Eli focuses his practice on oil and gas matters, including acquisition and divestiture of oil and gas assets, title opinions, joint

Additionally, the Court relied upon Section 9-07-16, N.D.C.C., which provides: “When a contract is partly written and partly printed, or when part of it is written or printed under the special directions of the parties and with a special view to their intention and the remainder is copied from a form originally prepared without special reference to the particular parties and particular contract in question, the written parts control the printed parts and the parts which are purely original control those which are copied from a form and if the two are absolutely repugnant the latter must be disregarded insofar as such repugnancy exists.” As a result, because the Pugh clause was not part of the form lease, Section 9-07-16, N.D.C.C. required that the Pugh clause control over the habendum or continuous drilling clauses. Johnson , 918 N.W.2d at 63. Thus, the Pugh clauses terminated the lease as to all lands not included within the three units producing in paying quantities at the expiration of the three- year primary term. The decision in Johnson underscores the importance of careful drafting and review of oil and gas leases and other instruments conveying interests in oil and gas rights. Failure to carefully draft the Pugh clause in Johnson rendered the continuous drilling clause permitting the lessee to maintain an oil and gas lease beyond the primary term meaningless. Parties to an oil and gas lease must consider how any additional terms or provisions added to a form oil and gas lease will interact with the remaining provisions in the lease.

operating agreements, federal leases, pooling and unitization issues. Eli is licensed to practice law in Texas, Oklahoma, Colorado and Ohio, is a regular speaker on issues relating to the development of unconventional shale plays and has given a variety of presentations regarding legal issues relating to oil and gas development. Eli earned his B.A from Kenyon College and his J.D., with honors, from Marquette University Law School.

Zachary Oliva Zachary Oliva is a partner with Kiefaber & Oliva LLP. Zack focuses his practice on energy and corporate law. He regularly assists clients in the drafting of oil and gas title opinions, purchase

EX T EX Division Order Services, LLC 4865Ward Road, Suite 200 Wheat Ridge, CO 80033 303-463-8799 303-463-8808 extexllc.com Fax Division Orders, Revenue Distribution, 1099’s Dennis Pade Boyd Sanstra Chris Pennels President Vice President Vice President and sale agreements and contract interpretation. Additionally, he assists clients with the negotiation, drafting and review of business formations, contracts and service agreements. Zack earned his B.A. from The Ohio State University and his J.D. from Capital University Law School. He is licensed to practice in New Mexico, Ohio and Texas.

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Legislative Update

Update

Texas

that interest and sends a draft or other form of payment with the offer must provide a notice, in 14 point type (“same size as”), that the offeree is selling all or a portion of their mineral or royalty interest. If this provision is violated, the hoodwinked offeree may sue to recover the real value of the interest sold and may recover its costs. §5.151 states that the taking of an oil and gas lease “shall not be deemed a purchase of a mineral or royalty interest” for the purposes of §5.151 . HB 3838 adds a new section, §5.152 of the Property Code, that appears to be aimed at the same miscreants. However, it is not limited to the mailing of an offer, applies only if you call the conveyance an “oil and gas lease”, a “gas royalty lease” or something similar, excludes a top lease, applies to a conveyance for a term, is limited to mineral or royalty interests already covered by an existing oil, gas, or mineral lease, and requires the insertion of a notice on each page in 14 point type containing language similar, but not identical, to that required in §5.151. Under this section, the conveyance is void if the proper notices are not provided and the deceived assignor may recover any royalties and bonuses paid to the miscreant, along with costs and attorney’s fees. So, if you are buying the minerals underlying an existing lease or the royalty under an existing lease, you cannot call it a lease; if you do, then you must provide a notice that says “THIS IS NOT AN OIL AND GAS LEASE. YOU ARE SELLING ALL OR A PORTION OF YOUR MINERAL OR ROYALTY INTEREST IN [described property]” on each page of the conveyancing instrument. You may still take a top lease and should be able to take a lease so long as the underlying lease has expired; if it has not yet expired make sure your lease says that it will not vest in possession until after the expiration of the lease in effect at the time you take your new lease.

On May 27, the 86th Regular Session of the Texas Legislature adjourned Sine Die (meaning, without day – meaning not to convene again until either a Special Session or until the start of the 87th Legislature in January 2021). Here is some legislation that passed, but not necessarily signed by the Governor that impacts the oil and gas industry. HB 2675 – Funding the Railroad Commission HB 2675 by Geren and Birdwell was passed on May 6 and signed by the Governor on May 17, to be effective on September 1. §81.067 TNRC provides for an “oil and gas regulation and cleanup fund” as an account in the general revenue fund of the state treasury. Into it are deposited various fees, bond proceeds, the lien proceeds from equipment sold for plugging, permit fees, proceeds from enforcement actions to close saltwater pits, waste hauler permit fees, hazardous oil and gas waste generation fees, cleanup regulatory fees, organization report fees, exception application fees, and various other fees and surcharges. When this fund reaches $30 million, the RRC must quit collecting certain of these fees. HB 2675 removes this $30 million ceiling. HB 3838 by Bailes, Harris and Birdwell was passed on May 24 and sent to the governor on May 26; the Governor has until June 16 to decide whether to sign it into law or file it without signing it (which constitutes approval). (Editor’s note: HB 3838 was signed by the Governor on June 10, 2019 and became effective September 1, 2019.) The Texas Property Code, in §5.151, currently says that a person who mails a mineral or royalty owner an offer to purchase HB 3838 – Limitation on Purchasing Underlying Minerals

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

SB 533 – Severance Tax Relief for Re-Activated Wells SB 533 by Birdwell, Creighton, Paddie and Springer was passed on April 25 and was signed by the governor on May 7, to be effective September 1. It provides severance tax relief for wells that have been returned to active status after two years of more of inactivity. A two-year inactive well is one that has not produced oil or gas in more than one month in the two years preceding the date of application for exemption. Excluded are wells included in an enhanced oil recovery project and drilled but uncompleted wells with no record of hydrocarbon production. If the well qualifies, it is entitled to a five-year exemption from severance tax and applies to both oil and gas wells. One must apply to the Railroad Commission for a two-year inactive well certification and hydrocarbons sold after the date of certification are eligible for the exemption. SB 533 is designed to incentivize operators to reactive inactive wells. SB 925 – Change in Calculating Low-Producing Wells SB 925 by Flores and Bailes was passed on May 8 and was signed by the Governor on May 20, to be effective September 1. Texas Tax Code §201.059 provides a reduction in severance taxes for low producing gas wells. A low producing well is a gas well whose production during a three-month period is no more than 90 mcf per day, excluding gas flared. A low producing oil well is one where for a 90-day period, production is less than (i) 15 bbls/day or (ii) 5% recoverable oil per barrel of produced water. §202.058 Texas Tax Code. If qualified, then the producer gets a credit against severance taxes imposed on production from that well based on a sliding scale (since the credit for oil production is eliminated if the oil price exceeds $30/bbl, only the gas credit is set out):

production qualifies for the 100% credit. The May 2019 crude oil price was $42.91, meaning that no oil production qualifies. Currently the determination of whether a well qualifies for the credit is based on production reports to the RRC. SB 925 changes the qualifying production to the greater of what is reported to the RRC or to the Comptroller. The reference price for natural gas is published by the Comptroller in the Texas Register. Application must be made to the comptroller not later than the end of the applicable period for filing a tax refund under Texas Tax Code §111.104. The net effect of the change should be to reduce the number of qualifying wells but there is no estimate of how many might be affected; the Legislative Budget Board certified that no fiscal implication to the State is anticipated.

About the Author:

Martin Gibson Martin Gibson’s practice

concentrates on energy law, with a particular focus on the exploration and production activities of independent oil and gas companies and individuals, both domestically and internationally. He is Board Certified in Oil, Gas and Mineral Law by the Texas Board of Legal Specialization and has deep experience in equity and debt financing of oil and gas related entities.

>$3.50/mcf no credit > $3.00 <$3.50 25% >$2.50 <$3.00 50% <$2.50 100%

Each month the Comptroller certifies the average taxable price of gas, adjusted to 2005 dollars during the previous three months. The May 2019 natural gas price was $1.82/Mcf meaning that natural gas

P.O. Box 864 Cedar Creek, Texas 78612

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Unclaimed

Property UNCLAIMED PROPERTY UPDATE by Gary Joseph, MBA, CIA – Keane Consulting & Advisory

3. Accounts Receivables – Customer and JIB 4. Land Checks 5. Lease and Rent Payments

Industry Update Unfortunately, holders in the oil & gas (“Energy”) sector are tasked with enduring one of the most arduous unclaimed property compliance responsibilities out there. To accompany day-to-day job responsibilities, those assigned unclaimed property management must also keep current with legislative updates, cyclical reporting, liabilities assumed via M&A activity, managing engagements with State Administrators and their 3rd party auditors, etc. As many holders have discovered, attaining and sustaining compliance is a year-round job function requiring company-wide accountability and cooperation from various divisions. To be clear – State Uniform Unclaimed Property Laws are anything but “uniform.” Outreach requirements, dormancy periods, statutory deadlines and a vast number of other critical factors differ by State which contributes to the reasoning behind why States project that more than 90% of businesses are out of compliance. Due to its dynamic nature, there is not a single software or system that has been created that will resolve 100% of the Unclaimed Property compliance issues – however we’re hoping contributing resources, such as this article, will assist in spotlighting areas to which your company may need to attend. ENERGY SECTOR - REPORTING One important note that must be stressed is that unclaimed property in the energy sector is not just mineral proceeds and suspended royalties. Although, it’s our experience that holders in the sector limit property reported to mineral proceeds and suspended royalties (“MI02”). While this property type presents the greatest unclaimed property exposure to energy companies, holders in this sector are also responsible for reporting anything that falls in to the definition of unclaimed property, such as the following property types: 1. Payroll 2. Accounts Payable

The aforementioned list is merely a snapshot of property types that should be reported in addition to Royalties. Omission of these property types from your unclaimed property filings can increase audit risk or receipt of an invitation to the Delaware Voluntary Disclosure Program (“DE VDA”) – which is now a precursor to Delaware audit. If your company has not historically reported Royalties or any of the other property types listed, it is imperative that an internal review of potential exposure related to these areas be completed to ensure they are being monitored for unclaimed property. Current to Pay Currently, there are now 30 Current to Pay (“CTP”) reporting jurisdictions, including the State of Colorado (“CO”) who adopted Section 209 of the Revised Uniform Unclaimed Property Act (“RUUPA”), with an effective date of July 1st, 2020. Section 209 of RUUPA states: “At and after the time property is presumed abandoned under this act, any other property right or interest accrued or accruing from the property and not previously presumed abandoned is also presumed abandoned.” As States continue to make their unclaimed property Statutes more comprehensive and inclusive, we expect more States to adopt this same provision which requires you to report all property held – even property that doesn’t meet the definition of abandonment once the initial trigger has been met. To further complicate matters, several States provide differing reporting instructions regarding Royalties. Texas, for example, instructs mineral proceeds reported under its CTP provision be filed under reporting code

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

MI10 – which is a non-NAUPA reporting code – while the State of Wyoming prohibits the “commingling of newly-reported owners with those previously reported.” DE VDA Invitations: A Precursor to DE Audit Companies in the Energy sector should remain on the lookout for a DE Secretary of State invitation to participate in the DE Voluntary Disclosure program. As noted above, the DE VDA notice, or invitation to participate in the program, is a precursor to audit assignment. Should your company elect not to respond to the DE VDA notice and enroll in the program, the company will be referred to the Delaware Department of Finance (“DE DOF”) office and will likely be AUDITED! Introduced in 2017, Senate Bill 13 established the terms under which the State of Delaware can authorize an unclaimed property audit on holders. With this landmark legislation, the Delaware Unclaimed Property Laws were revised, and a more “holder friendly” approach to compliance enforcement was enacted. The Delaware Secretary of State (“DE SOS”) office oversees the DE VDA program, and issues DE VDA invitations to holders – mainly those of which are domiciled in the State of Delaware. In the event the notice is not responded to within the 60-day window, DE DOF is notified and the company is flagged as audit eligible. Again, if your company is flagged as audit eligible, the company can be selected for AUDIT! It is imperative that staff members whom receive mailings forward the DE VDA notice to the proper decision makers so that it can be responded to timely. What we’ve noticed in the industry is that several companies were unaware of the fact that they received the invitation due to a number of reasons such as: 1. Addressed to former employees/executives 2. Addressed to subsidiary entity and not parent Although the DE VDA can be a cumbersome exercise to complete – it is far less contentious and frustrating than an audit by one of the State’s contracted 3rd party auditors. Please be sure that your staff and peers are informed of the gravity of this correspondence. Legislative Changes Affecting You! Texas HB 3598

makes a number of changes to the unclaimed property law, including: • Combined Reporting: holders of an affiliated group must file one report for the affiliated group; • Continuing Reporting: holders that are required to file a report in any year must file reports in each successive year. If a holder does not have reportable property in any given year, a negative report is required. • Record Retention: without regards to whether the property is reported in the aggregate, holders shall maintain records for 10 years from the later of the date on which the property is reportable or the date the report is filed. • Enforcement: the comptroller is authorized to take testimony, administer oaths, and issue subpoenas. If the court determines that a subpoena was issued in good faith, the court shall order compliance with the subpoena and may apply penalties for civil and criminal contempt otherwise available at law if a person refuses to comply. Colorado SB 88 Enacted on April 16, 2019 and effective on July 1, 2020, CO S 88 is similar to the 2016 Revised Uniform Unclaimed Property Model Act (“RUUPA”) in that new property types are eligible to escheat; dormancy periods and trigger dates for many property types are updated; and additional electronic outreach is required for holders who do not communicate with owners of retirement accounts, custodial accounts or securities via regular mail. As a result, dormancy periods will be reduced for many property types to 3 years (banking property will remain at 5 years) and new trigger dates will determine when an account is eligible to escheat. Due diligence letters must be sent between 60 and 180 days prior to filing the report to owners of property valued at $25 or more. The requirements for the content of the notice are the same as in RUUPA. However, for those owners who have consented to receive electronic mail delivery from the holder, notice may be sent by email in the place of regular mail, unless the holder has evidence that the email cannot be delivered. Additional changes to the law as a result of S 88: • Increases the record retention period to 10 years. • Includes a 5-year transitional provision.

Enacted and effective as of June 10, 2019, TX H 3598

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About the Author:

• Eliminates the deduction currently available. • Colorado becomes a CTP state, such that, for mineral interests (including royalties), once the abandonment period is met for the first payment, all subsequent amounts due, held or owing to an owner become reportable. • Interest rates and penalties increase, though they may be waived by the administrator.

Gary Joseph, MBA, CIA Senior Manager Keane Consulting and Advisory

Gary Joseph assists companies operating in the energy sector with State Unclaimed Property compliance. Gary has nearly a decade of experience

Conclusion

in the Unclaimed Property space, formerly serving as both an Audit Manager and Program Leader for a 3rd party audit firm and now assisting clients defend against audits, navigate through voluntary disclosure engagement and obtain overall compliance. He resides in Houston, Texas!

We here at Keane sincerely hope that you are finding our articles to be useful and value adding. If there is any specific subject matter applicable to the industry of which you wish for us to address in the future, we ask that you reach out using the contact information in the “ABOUT THE AUTHOR” section.

Phone: (267) 566-3962 Email: gjoseph@keaneup.com

North Carolina

Reporting Reminder for Unclaimed Property Holders Unclaimed property holder reports from businesses and organizations are due to the North Carolina Department of State Treasurer by November 1 of each year; unless you are a life insurance company, in which case your reports are due by May 1 of each year.

We have a NEW enhanced website!

Visit NCCash.com and scroll down to see our Holder Reporting portal. This is a new feature that allows you to submit your report directly to us! The Holder Payment portal is a new feature that allows you to submit a payment if you are paying by ACH and your report has been submitted via the Holder Reporting portal. Holder Information and Reporting contains links to North Carolina’s 4 Step Reporting Process. If you are in the process of preparing your report, visit Step 3: Prepare Your Report. If you have a report created, visit Step 4: Submit Your Report and Remit Funds Due. Visit the Reporting Library to locate reference material and guides.

If you have questions, please contact us by email at: upreports@nctreasurer.com

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2019 Unclaimed Property Compliance Updates By: Karen Anderson, Director – KPMG, LPP Quin Moore, Manager – KPMG, LLP

In 2019, state legislatures considered and enacted several unclaimed property measures that impact the oil and gas industry’s obligations to perform due diligence, and report and remit mineral interest proceeds. Further, these reforms affect state administrators’ abilities to enforce unclaimed property requirements, which may be especially important to companies currently undergoing unclaimed property audits. The changes to existing escheat laws and requirements include statute of limitations modifications, due diligence enhancements, and even specific provisions for mineral interest owners who die intestate. This article provides a summary of some of the more significant enacted legislative provisions. I. Unclaimed Property Act Revisions Seven state legislatures attempted sweeping re-writes of their unclaimed property statutes through introductions of statutes patterned after the 2016 Revised Uniform Unclaimed Property Act, however, only two of those measures were signed into law: Colorado SB 88 (effective 7-1-2020) and Maine SP 481 (effective 10-1-2019). The Colorado and Maine law changes include, among other things, the following: • Adds “current to pay” language; • Alters many dormancy periods from 5 years to 3 years; • Eliminates the $25 or 2% deduction; (“more or less” deduction) • Includes a “retroactive transition” provision; • Changes the “window” within which due diligence must be performed and changes the due diligence minimum threshold; • Requires specific language be placed on the top of due diligence notices; (Section 38-13-502 (1) and (2)(d)) • Provides that if an owner has “consented” to receiving Colorado (SB 88)

communications from the holder via email, that the holder can send the owner a due diligence notice via first class mail or email; and • Authorizes the administrator to issue administrative subpoenas requiring holders to produce records in an audit and seek subpoena enforcement.

Maine (SP 481)

• Changes the time period within which due diligence must be performed; • Requires specific language be placed on the top of due diligence notices; • Provides that if an owner has consented to receiving communications from the holder via email, that the holder must send the owner a due diligence notice via first class mail and email; Specifies that records must be retained for 10 years after the later of the date the report was filed or the last date a timely report was due to be filed; further dictates that those records must include not only records substantiating what was reported, but records relating to items that were not reported sufficient to allow an examination to determine whether the business has complied with the law; and • Authorizes the administrator to issue administrative subpoenas requiring holders to produce records in an audit and seek subpoena enforcement.

General Due Diligence, Reporting and Compliance- Related Changes

Some states enacted changes to, or amended regulations relating to, existing due diligence, reporting, and enforcement-related provisions within their statutes that holders should take note of, including:

1 Colorado SB 88, District of Columbia B 225, Maine SP 481, Minnesota HB 2209 and HB 2538, South Carolina HB 4200 and SB 524, Vermont HB 550, and Washington HB 1179

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1. Due Diligence a. Nevada – Added email due diligence requirements in certain circumstances 2 b. North Dakota – Added requirement that the North Dakota unclaimed property division contact information be included in due diligence notices 3 2. Aggregate Limits & Reporting a. Nevada – Eliminated aggregate limit thereby eliminating reporting in this manner 4 . (The aggregate limit is the prescribed dollar amount under which property items can be reported by property type in a combined lump sum.) b. South Dakota – Reduces the aggregate limit from $50 to $10 5 3. Negative & Consolidated Reporting a. Texas – Mandates negative and consolidated reporting in certain circumstances 6 4. Report & Remittance Delivery Specifications a. Nevada – Reports must be delivered via a “business portal established by the Administrator” and payment must be made through that portal of the total amount due 7 b. Nevada - Adds a new penalty for holders failing to remit through the online portal, which is the greater of $50 or 2% of the remittance. 8 II.Mineral Interest – Specific Unclaimed Property Legislative and Regulatory Changes a. North Dakota – For mineral interests, the unclaimed property report must include a legal land description, well number, recording information, and any other information necessary to adequately describe the lease. 9

b. Utah – Clarifies the “no taker” provision addressing mineral interests and proceeds when there is no taker. Adds a provision requiring an operator, owner or payer that determines that a mineral interest or mineral proceeds are a part of a decedent’s intestate estate, to submit to the Utah School and Institutional Trust Lands Administration information about: • the identity of the decedent, • the results of a good faith search for heirs, and • the property interest from which the mineral interest or proceeds are derived. The operator, owner, or payer must submit the information within 180 days of acquiring it. 10 c. West Virginia – HB 4268 (the “Co-Tenancy Bill”) is in full effect. West Virginia has created a new Co- Tenancy MI11 NAUPA code and requires electronic reports and remittances be submitted every quarter for unclaimed Co-Tenancy/Reserved Interests property. 11 As we head into a new year, we will kick off a new legislative season. For information on staying current with legislative and regulatory changes and how they may impact your escheat program, contact: Karen Anderson Director, State & Local Tax, Unclaimed Property karenanderson@kpmg.com Ph: 303-382-7020

Quin Moore Manager, State & Local Tax, Unclaimed Property

qmoore@kpmg.com Ph: 360-319-3624

2 NV SB 44 (effective 7/1/2019), NRS §120A.560 (8)(b) 3 N.D. Admin. Code § 85-03-02-02 (effective January 1, 2019) ( 4 NV SB 44 (effective 7/1/2019), NRS §120A.560 5 SD HB 1146 (effective 7/1/2019 ) S.D. Codified Laws §43-41B-18 (b) (4)) 6 TX HB 3598 (effective 6/10/2019), Tex. Prop. Code Ann. § 74.106 (b)

7 NV SB 44 (effective 7/1/2019), NRS §120A.560 (11) 8 NV SB 44 (effective 7/1/2019), NRS §120A.730 (6)

9 N.D. Admin. Code § 85-03-02-02 (effective January 1, 2019) 10 UT SB 78 (effective 5/14/2019), Utah Code Ann. § 75-2-105 11 WV HB 4268 (effective 7/1/2018,) W. Va. Code, § 37B-2-1 and https://wvtreasury.com/Unclaimed-Property/Co- Tenancy-Property (new property code)

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Counterpart

Connection

Kaprice Pearson Local Association Coordinator

Local Reporters for 2019 Magazine:

APPALACHIAN BASIN ASSOCIATION OF DIVISION ORDER ANALYSTS (ABADOA) Association Based in the Pittsburgh, Pennsylvania Area Serving NY, OH, PA, WV (Inactive)

ABADOA: Inactive ALTDOA: Inactive CAPDOA: Whitney Katigan –

whitney.katigan@flywheelenergy.com

DADOA: Lauren Roswold –

………………………………… ARKLATEX ASSOCIATION OF DIVISION ORDER ANALYSTS (ALTDOA) Association based in the Shreveport, LA Area (Inactive) ………………………………… CAPITAL ASSOCIATION OF PROFESSIONAL DIVISION ORDER ANALYSTS (CAPDOA) Association based in the Oklahoma City, OK Area

lauren.roswold@whiting.com

DALWORTH: Kimberly Ginter –

KGinter@finleyresources.com

HADOA: Sara L. Galloway –

sara.galloway@energytransfer.com

MAADOA: Diana Richecky – diana@dukedrilling.com PBADOA: Kaprice Pearson – KPearson@concho.com SADOA: Jamie Donohue – jamie.a.donohue@cop.com

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For information regarding DALWORTH, please visit our website at www.dalworth.org. ………………………………… DENVER ASSOCIATION OF DIVISION ORDER

ANALYSTS (DADOA) Association based in the Denver, CO Area

CAPDOA 2019 BOARD President – Whitney Katigan Vice President – Kodi Foreman Treasurer – Amy Smith Secretary – Maryann Maimo Directors – Chasta Butler Amy Lofgren Hailey Price CAPDOA Advisor – Melissa Martin NADOA Director – Valerie Wible, CDOA

DADOA 2019 Board: President: Sandi Rupprecht Vice President: Evelyn Kastner

Secretary: Leslie Blancett Treasurer: Allison Blancett Director: Caitlin Coupens Director: Wendy Hopkins Director: Linda Osminer Board Advisor: Stan Vargas NADOA Director: Lauren Roswold The Denver Association of Division Order Analysts (DADOA) members who attended this year’s Institute in Ft. Worth, TX had a wonderful time! First time attendee Renae Ludrick had this to say, “This was my first experience at NADOA, and it was better than I imagined it would be. The classes were extremely beneficial as well as the networking opportunities”. Sean McGrath also commented on how beneficial the Institute was, “The 2019 NADOA Convention was a tremendous opportunity to learn, network and to have fun! The calculation classes gave me a new perspective on how to calculate the various interests that one finds in a well and a new way of explaining those calculations to those who ask.” We couldn’t agree more with Renae and Sean! The 2019 Institute was a huge hit and the location was spectacular. DADOA members are already looking forward to more fun and learning opportunities at next year’s Institute!

For more information regarding CAPDOA, please visit our website at www.capdoa.org. ………………………………… DALWORTH ASSOCIATION OF DIVISION ORDER ANALYSTS (DALWORTH) Association serving the Dallas/Fort Worth, TX Area

DALWORTH 2019 BOARD President: . ....................................... Megan McKee, CDOA 1st Vice President: ....................................... Christy Ewert 2nd Vice President: ................................................... Open 3rd Vice President: . ................................. Kimberly Ginter Recording Secretary: .....................................Sharon Clute Corresponding Secretary: . ..........................Angie Roberts Treasurer: . ..............................................Eli Murray, CDOA Director – Compliance: ..............Melanie Finnegan, CDOA Director – House: ...........................................Vickie Coles Director – Hospitality: ... .Lindsay Grose & Lauryn Barnes Director – Historian: ................................ Cindy Marhanka Director – Scholarship: . ................................ Isabel Zhang Board Advisor: ............................Melanie Finnegan, CDOA NADOA Liaison: ...................................... Kimberly Ginter

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analyst I can be. But above all, what I look forward to the most when attending Institute is running into old friends and meeting new ones. Thanks again HADOA for this incredible educational opportunity! The October luncheon was presented by Steven Hager, owner of Data Wizard. His insight on oil and gas acquisition data and how to best fit into your company’s system was very informative. HADOA members volunteered at the Houston Food Bank for our November event. Lunch was provided for those who helped our community. The December Luncheon is always the fan favorite. The Downtown Aquarium was the location for the big event. Raffle tickets were sold for gift baskets donated by members. All raffle proceeds were donated to Head Strong, Brain Injury Foundation www.headstrongbrain.org . Coming up for 2020: January 22, 2020 - Luncheon • Recent Regulatory Developments at the Railroad Commission February 19, 2020 - Luncheon • Andrew Potts, Kirby Mathews, & Walrath, New Mexico vs. Texas March 31, 2020 - Luncheon • Escheat April 22, 2020 • Annual Full Day Seminar hosted by Southwestern Energy For additional information regarding HADOA please view our website: www.HADOA.org. ………………………………… MID-AMERICA ASSOCIATION OF DIVISION ORDER ANALYSTS (MAADOA) Association based in the Wichita, KS Area

For more information regarding DADOA, please visit our website at www.dadoa.org. ………………………………… HOUSTON ASSOCIATION OF DIVISION ORDER

ANALYSTS (HADOA) Association based in the Houston, TX Area

HADOA 2019 BOARD President: ..................................................................Victoria Frey 1st Vice President: .......................................... Stephanie Nguyen 2nd Vice President: ...............................................Heather Lister 3rd Vice President: ........................................... Jason Alexander Recording Secretary: . ....................................... Jennifer Kegans Corresponding Secretary: .................. Yolanda Bazan, CDOA Treasurer: ....................................................Dale Bender, CDOA House & Hospitality: .......................................... Amanda Blair Business & Rules Director: ............................ Christine Burton Advertisement Director: ...........................................Kassi Bevill Ways & Means............................................................Meha Gargi Historical Director.................................................Sara Galloway Board Advisor: ......................................April Luedecke, CDOA The 2019 HADOA Scholarship winners wrote the following about their experience at the 2019 NADOA Institute. Barbara Bowman: The Institute this year in Fort Worth was by far one of the best that I have attended in the past 30 years. I thought the facilities and food were great, the selection of speakers on topics current to the industry were very educational as well as polished in their performance. It was very apparent that a lot of time and planning went into the success of the meetings. I hope for the future - that more people will be able to attend - information gained as well as business/network contacts is a win-win for all of us. Britney Voelkel: When my name was pulled as the winner of the 2019 NADOA Institute scholarship I was so excited! This was my third Institute to attend and it was a fantastic time. The Thursday night event was top notch! We had delicious food, lots of fun interactive activities, like the mechanical bull and roping challenge and the Uptown Drive band was the icing on the cake. I’m always amazed at the great classes, speakers and vendors that are coordinated each year. They are the best and are truly beneficial to helping me be the best

Be sure to check out our website at maadoa.org. It has useful links to various operations in Kansas. Diana Richecky, MAADOA Secretary diana@dukedrilling.com 316-267-1331 …………………………………

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Rose Kidder- I was excited to be one of the recipients of the scholarship and I must say that I learned a lot and I had a great time! I was very impressed with the Omni Hotel. Being in such a wonderful place and have them take such good care of me (and everyone else) made me feel very lucky. During this time, I realized that there are a lot of people who love their job and that are very passionate about learning the things that are changing in the industry. That we all want to better understand the complexities and to keep up with this rapid change. I was able to network and make new friends and to see Ft. Worth in a whole new light.

PERMIAN BASIN ASSOCIATION OF DIVISION ORDER ANALYSTS (PBADOA) Association based in the Midland, TX Area

Please notice our brand new PBADOA logo! Thank You to Mr. Efrain Vasquez and Lone Star Signs for donating their time, talent and materials to create our beautiful logo and a display banner for our events. PBADOA 2019 Board President: ....................................................... Courtney Poitevint Vice President.......................................................... Heather Liles Treasurer ..............................................................Jennifer Lujano Secretary ............................................................Kara Mondragon Director-Membership..............................................Lily Sanchez Director-Publicity...................................................... Sarah Lujan Director-Information Technology................. Amber Natividad Board Advisor. ................................................... Kaprice Pearson NADOA Liaison................................................. Kaprice Pearson Our PBADOA members had a great time in Ft Worth, TX! The 2019 NADOA Institute offered a variety of classes and opportunities to learn more about our industry. We asked our 2019 local association scholarship winners to write about their experience at Institute. Estella Pena- I really loved the opportunity to get to attend this year’s NADOA Institute, that was made possible with the scholarship awarded to me. I had lots of fun at all the events that were planned out this year. I am looking forward to attending again next year. I believe everything went smoothly and all classes were great - the only thing I would possibly like to see in the future is presentation handouts. Some of the material was hard to see when the classes were full. Again, Thank you! Lily Sanchez – This was my first year to attend Institute and I loved it! I am a hands-on type of person, so actually attending opened my mind to more things. Learning from experienced people who have been in the industry for so many years was great. The location, food, and classes were beyond my expectations. I met so many people from different places, can’t wait to go next year!

Melissa Munson, with Steptoe-Johnson, PLLC was the speaker for our October luncheon. Her presentation on “Unrecorded Agreements and the Duty of Inquiry” was very interesting and we appreciate her taking the time to speak to our members. Amy Hopmann, Drew Hopkins, and Maryann Maimo were our speakers for November. Their presentation, “Land Administration – Communication Roadblocks & the Path to Success” highlighted information that can help all division order analysts. We are look forward to 2020 and another great year filled with networking and learning opportunities! For more information regarding PBADOA, please visit our website at www.pbadoa.org. …………………………………

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