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
8
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
Made with FlippingBook - Online magazine maker