Bill > HB4490

This bill aims to clarify the royalty owed to a royalty owner in an oil and gas lease. It prohibits the issuance of permits for the drilling or reworking of oil and gas wells if the lease or contract provides for a "flat well royalty" arrangement, where the royalty is not inherently related to the volume of oil and gas produced. However, the bill allows the issuance of such permits if the applicant certifies that the royalty owner will receive at least one-eighth of the gross proceeds, free from any deductions for post-production expenses, from the sale of the oil or gas at the first point of sale to an unaffiliated third-party in an arm's length transaction. The bill also provides the royalty owner with a cause of action to enforce their rights under this provision.