BY SENATORS Bishop and Chlouber;
also REPRESENTATIVES George, G. Berry, Dyer,
Smith, Taylor, and Young.
CONCERNING THE OBLIGATIONS OF PARTIES TO AGREEMENTS
FOR THE PAYMENT OF PROCEEDS FROM THE SALE OF OIL AND GAS.
Be it enacted by the General Assembly of the State
of Colorado:
SECTION 1. 3460118.5
(2) and the introductory portion to 3460118.5 (5),
Colorado Revised Statutes, are amended, and the said 3460118.5
is further amended BY THE ADDITION OF THE FOLLOWING NEW SUBSECTIONS,
to read:
3460118.5. Payment of proceeds.
(2) (a) UNLESS OTHERWISE AGREED PURSUANT TO PARAGRAPH
(b) OF THIS SUBSECTION (2), payments of proceeds derived from
the sale of oil, gas, or associated products shall be paid by
a payor to a payee commencing not later than six months after
the end of the month in which production is first sold. Thereafter,
such payments shall be made on a monthly basis not later than
sixty days for oil and ninety days for gas and associated products
following the end of the calendar month in which subsequent production
is sold. unless other terms or arrangements
for the first and subsequent payments are provided in a valid
lease or other agreement between the payor and payee.
Payments may be made annually if the aggregate sum due a payee
for twelve consecutive months is twentyfive
ONE HUNDRED dollars or less.
(b) THE PAYOR AND PAYEE MAY PROVIDE, IN
A VALID LEASE OR OTHER AGREEMENT, FOR TERMS OR ARRANGEMENTS FOR
PAYMENT THAT DIFFER FROM THOSE SET FORTH IN PARAGRAPH (a) OF THIS
SUBSECTION (2).
(2.3) NOTWITHSTANDING ANY OTHER APPLICABLE
TERMS OR ARRANGEMENTS, EVERY PAYMENT OF PROCEEDS DERIVED FROM
THE SALE OF OIL, GAS, OR ASSOCIATED PRODUCTS SHALL BE ACCOMPANIED
BY INFORMATION THAT INCLUDES, AT A MINIMUM:
(a) A NAME, NUMBER, OR COMBINATION OF
NAME AND NUMBER THAT IDENTIFIES THE LEASE, PROPERTY, UNIT, OR
WELL OR WELLS FOR WHICH PAYMENT IS BEING MADE;
(b) THE MONTH AND YEAR DURING WHICH THE
SALE OCCURRED FOR WHICH PAYMENT IS BEING MADE;
(c) THE TOTAL QUANTITY OF PRODUCT SOLD
ATTRIBUTABLE TO SUCH PAYMENT, INCLUDING THE UNITS OF MEASUREMENT
FOR THE SALE OF SUCH PRODUCT;
(d) THE PRICE RECEIVED PER UNIT OF MEASUREMENT,
WHICH SHALL BE THE PRICE PER BARREL IN THE CASE OF OIL AND THE
PRICE PER THOUSAND CUBIC FEET ("MCF") OR PER MILLION
BRITISH THERMAL UNITS ("MMBTU") IN THE CASE OF GAS;
(e) THE TOTAL AMOUNT OF SEVERANCE TAXES
AND ANY OTHER PRODUCTION TAXES OR LEVIES APPLIED TO THE SALE;
(f) THE PAYEE'S INTEREST IN THE SALE,
EXPRESSED AS A DECIMAL AND CALCULATED TO AT LEAST THE SIXTH DECIMAL
PLACE;
(g) THE PAYEE'S SHARE OF THE SALE BEFORE
ANY DEDUCTIONS OR ADJUSTMENTS MADE BY THE PAYOR OR IDENTIFIED
WITH THE PAYMENT;
(h) THE PAYEE'S SHARE OF THE SALE AFTER
ANY DEDUCTIONS OR ADJUSTMENTS MADE BY THE PAYOR OR IDENTIFIED
WITH THE PAYMENT;
(i) AN ADDRESS AND TELEPHONE NUMBER FROM WHICH
ADDITIONAL INFORMATION MAY BE OBTAINED AND QUESTIONS ANSWERED.
(2.5) UPON WRITTEN REQUEST BY THE PAYEE,
SUBMITTED TO THE PAYOR BY CERTIFIED MAIL, THE PAYOR SHALL PROVIDE
TO THE PAYEE WITHIN SIXTY DAYS A WRITTEN EXPLANATION OF THOSE
DEDUCTIONS OR ADJUSTMENTS OVER WHICH THE PAYOR HAS CONTROL AND
FOR WHICH THE PAYOR HAS INFORMATION, WHETHER OR NOT IDENTIFIED
WITH THE PAYMENT. THIS REQUIREMENT SHALL NOT PRECLUDE THE PAYOR
FROM ANSWERING THE INQUIRY BY REFERRING THE PAYEE TO THE ROYALTY
CLAUSE OR PAYMENT PROVISION IN A LEASE OR OTHER AGREEMENT.
(2.7) A PAYOR WHO FAILS TO PROVIDE INFORMATION
REQUIRED OR REQUESTED IN ACCORDANCE WITH SUBSECTION (2.3) OR (2.5)
OF THIS SECTION SHALL BE SUBJECT TO PENALTIES AS PROVIDED IN SECTION
3460121.
(5) ABSENT A BONA FIDE DISPUTE OVER THE
INTERPRETATION OF A CONTRACT FOR PAYMENT, the oil and gas conservation
commission shall have exclusive
jurisdiction to determine the following:
(5.5) BEFORE HEARING THE MERITS OF ANY
PROCEEDING REGARDING PAYMENT OF PROCEEDS PURSUANT TO THIS SECTION,
THE OIL AND GAS CONSERVATION COMMISSION SHALL DETERMINE WHETHER
A BONA FIDE DISPUTE EXISTS REGARDING THE INTERPRETATION OF A CONTRACT
DEFINING THE RIGHTS AND OBLIGATIONS OF THE PAYOR AND PAYEE. IF
THE COMMISSION FINDS THAT SUCH A DISPUTE EXISTS, THE COMMISSION
SHALL DECLINE JURISDICTION OVER THE DISPUTE AND THE PARTIES MAY
SEEK RESOLUTION OF THE MATTER IN DISTRICT COURT.
(8) (a) NOTHING IN THIS SECTION SHALL
BE CONSTRUED TO ALTER EXISTING SUBSTANTIVE RIGHTS OR OBLIGATIONS
NOR TO IMPOSE UPON THE OIL AND GAS CONSERVATION COMMISSION ANY
DUTY TO INTERPRET A CONTRACT FROM WHICH THE OBLIGATION TO PAY
PROCEEDS ARISES.
(b) SUBSECTIONS (2.3), (2.5), AND (2.7)
OF THIS SECTION SHALL APPLY TO PAYMENTS OF PROCEEDS DERIVED FROM
SALES OCCURRING ON OR AFTER JULY 1, 1998.
SECTION 2. Effective date.
This act shall take effect July 1, 1998.
SECTION 3. Safety
clause. The general assembly hereby finds, determines, and
declares that this act is necessary for the immediate preservation
of the public peace, health, and safety.
____________________________ ____________________________
Tom Norton Charles E. Berry
PRESIDENT OF SPEAKER OF THE HOUSE
THE SENATE OF REPRESENTATIVES
____________________________ ____________________________
Patricia K. Dicks Judith M. Rodrigue
ASSISTANT SECRETARY OF CHIEF CLERK OF THE HOUSE
THE SENATE OF REPRESENTATIVES
APPROVED________________________________________
_________________________________________
Roy Romer
GOVERNOR OF THE STATE
OF COLORADO