House Committee Roll Call Votes

A06037 adds a definition for postproduction costs and provides that royalties for unconventional wells are to be calculated at the point at which production enters the commercial market place and ownership transfers to another unrelated business entity. In cases where production enters the commercial marketplace and a transfer of ownership is not between two parties at arm’s length, the lessee shall have the burden to prove that the royalty calculation and royalty paid are at fair market value. And, deductions for postproduction costs shall not be taken if the deduction results in a royalty of less than 1/8th. Finally, language is added such that nothing in the act shall be construed to require retroactive recalculation or repayment of royalty payments made prior to the effective date of the act and no lease shall be invalidated for deductions that resulted in royalty payments of less than 1/8th prior to the effective date of the act. The act is to apply to all current and future lease agreements.