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Author Topic: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)  (Read 570 times)

mmwv

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The Co-tenancy bill was just introduced in the House. It is available online here: http://www.wvlegislature.gov/Bill_Status/bills_text.cfm?billdoc=hb4268%20intr.htm&yr=2018&sesstype=RS&i=4268

The bill will be considered in the House Energy Committee, probably starting this week.

Highlights:

•             Co-tenants owning 75% of the undivided interest must “consent” in writing to development
•             Operators must use reasonable efforts to locate and/or to lease all “non-consenting” co-tenants
•             Non-consenting co-tenants have 45 days after receipt of operator’s best and final lease offer in which to elect to either:
o             Accept their pro-rata share of royalty at the highest royalty rate paid to a consenting owner in the same mineral tract free of post-production costs; or
o             To Participate in the development
•             Unlocatable owners’ pro-rata royalty to be held and delivered to the state
•             Non-consenting co-tenants who elect to take a royalty should benefit from terms of the consenting co-tenants’ leases which are favorable to the non-consenting co-tenant
•             The O&G Conservation Commission may create rules to govern non-consenting owners who elect to participate
•             The surface over any mineral tract with a non-consenting owner cannot be used without an agreement with the surface owner, whether or not the surface owner owns an interest in the minerals.
•             Procedures for handling royalties due to unknown or unlocatable interests are laid out, and an interest-bearing Unknown and Unlocatable Interest Fund is created within the State Treasury
I am an in-house Landman with a small independent e&p company.  I have worked around most of Western PA and WV, as well as on projects in several other places. 
Opinions are mine and do not represent my employer.

ghrit

  • Posts: 3304
  • Member since October 05, 2008
Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #1 on: January 24, 2018, 10:46:13 AM »
Second bullet:  Who decides if the effort is reasonable?  That is a court case awaiting in the wings.
There are two kinds of ships.  Submarines and targets.
www.survivalmonkey.com

mmwv

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Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #2 on: January 25, 2018, 10:16:37 AM »
The "reasonable" efforts to identify and locate unknown or unlocatable interest owners are spelled out in the bill fairly specifically.

The specific language for reasonable negotiation just says (note: the bill defines royalty owners as owners of executory interests):

"If an operator or owner makes reasonable efforts to negotiate with all royalty owners in an oil or natural gas mineral property and royalty owners vested with at least three fourths of the right to develop, operate, and produce oil, natural gas, or their constituents, ....consent to the lawful use or development of the oil or natural gas mineral property, the operator’s or owner’s use or development of the oil or natural gas mineral property is permissible, is not waste, and is not trespass."


My initial argument on behalf of the gas company would be that if 75% or more of the interest owners accepted the deal we are offering, it has to be considered "reasonable." 
If I have offered you the same or better deal than most of the other owners have already accepted, I think that it will be hard to argue that I am being unreasonable.

I am an in-house Landman with a small independent e&p company.  I have worked around most of Western PA and WV, as well as on projects in several other places. 
Opinions are mine and do not represent my employer.

macal

  • Posts: 9304
Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #3 on: January 25, 2018, 11:26:20 AM »



  Are you dealing with a lot of coal heirs.

mmwv

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Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #4 on: February 06, 2018, 06:38:23 AM »
I deal with a lot of heirs. Lots and lots.

I had meant to mention that the Co-Tenancy bill is being moved with a companion bill, HB 4270, which is nicknamed the "Check Stub Bill" and has a lot of requirements for disclosure of sales and deductions on royalty statements.

http://www.wvlegislature.gov/Bill_Status/bills_History.cfm?input=4270&year=2018&sessiontype=rs
I am an in-house Landman with a small independent e&p company.  I have worked around most of Western PA and WV, as well as on projects in several other places. 
Opinions are mine and do not represent my employer.

mmwv

  • Posts: 28
    • My LinkedIn page
Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #5 on: February 16, 2018, 02:41:36 AM »
Yesterday the WV House of Delegates passed both 4268 and 4270.
4268, co-tenancy, was amended in several ways. It now only asapplies if there are 7 or more owners of the mineral tract. It also includes a provision allowing surface owners to gain title to that portion of the minerals owned by unknown or unlocatable heirs. There were otherchanges from the original, including adding an appeals process to the oil and gas conservation commission for nonconsenting cotenants.
4270, the check stub transparency bill, was also sent to the Senate yesterday.
I am an in-house Landman with a small independent e&p company.  I have worked around most of Western PA and WV, as well as on projects in several other places. 
Opinions are mine and do not represent my employer.

 


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