| (I) The applicant shall designate the reporter who
will submit the annual reports and, if there are multiple reporters
for a lease, the information the designated reporter will submit.
Upon approval, GLO staff will assign an annual submission certification
number to the designated reporter and the GLO will authorize the designated
reporter to submit the designated reports on an annual basis. The
applicant shall notify GLO in writing of any change in the reporter
designation within ten business days of its effective date.
(II) Reporters, after approval, shall submit annual
reports for the following January 1 to December 31 annual production
periods.
(III) Reporters, after approval, shall continue to
submit reports on a monthly basis until the commencement of the next
annual production period. Unless the GLO expressly approves otherwise
in writing, reporters shall submit unit production/royalty reports
on a monthly basis regardless of the annual reporting status of individual
leases within the unit.
(IV) Each year, reporters shall ensure that all annual
reports concerning oil and condensate are timely received by the GLO
on or before the fifth day of February following each annual production
period. Each year, reporters shall ensure that all annual reports
concerning gas are timely received by the GLO on or before the 15th
day of February following each annual production period.
(V) After the reporter receives GLO approval for annual
reporting, if the total annual oil, condensate, and gas royalty due
under a lease exceeds $3,000 for any annual production period, reporters
shall resume making monthly reports starting with the January production
month immediately following that annual production period.
(VI) Reporters shall ensure that all reports approved
by the GLO for submission on an annual basis are timely received by
the GLO on or before 75 calendar days after a complete lease forfeiture,
release, termination, assignment, or any change of designated reporter.
If a change of reporter occurs for a lease with multiple reporters,
only the changing reporter shall submit the reports for which he is
designated as being responsible on or before 75 calendar days after
the change.
(VII) Any forfeiture, release, termination, assignment,
or change of operator or reporter does not affect the approved annual
reporting status, subject to subclause (VI) of this clause. However,
as provided in §9.93(l) of this title (relating to Assignment),
an assignee or successor in interest is liable for all unsatisfied
reporting requirements of the assignor or predecessor in interest.
(VIII) The GLO may prescribe further specific forms
and instructions applicable to this subparagraph.
(IX) The GLO has the sole discretion to approve annual
reporting. Approval does not affect the state's right to take its
royalty in-kind, nor does it constitute a finding that a lease has
been maintained in force and effect or otherwise ratify or revive
any lease. GLO approval does not abrogate the lessee's responsibility
to submit timely royalty payments and reports to the GLO as provided
in subparagraphs (L) and (M) of this paragraph.
(X) Determination of royalty due for purposes of clause
(ii) of this subparagraph is not an official GLO determination of
royalty due under a lease. The GLO may audit any lease to determine
if royalty was properly paid and may pursue its rights and remedies
through an administrative hearing or litigation.
(iii) Lessees shall identify the relevant GLO lease
numbers and annual submission certification numbers, if any, on all
required reports. Reports that fail to identify these numbers shall
be considered delinquent and shall be subject to the delinquency provisions
of subsection (b)(3) of this section.
(H) Gas contracts. Lessees shall file with the GLO
a copy of all contracts under which gas is sold or processed and all
subsequent agreements or amendments to such contracts within 30 days
of entering into or making such contracts, agreements, or amendments.
Such contracts, agreements, and amendments, when received by the GLO
will be held in confidence by the GLO unless otherwise authorized
by lessee.
(I) Gas contract brief (Form GLO-5).
(i) Each gas contract, agreement, or contract amendment
must be accompanied by a gas contract brief (Form GLO-5) completed
in the form and manner prescribed by GLO. The GLO-5 must be submitted
even if GLO is taking its royalty in-kind from the leases subject
to the contract or agreement. The GLO-5 shall be submitted to the
GLO within 30 days of executing a contract, agreement, or contract
amendment. While the lessee is responsible for the preparation and
filing of the GLO-5 and supplements, the lessee is not required to
submit the GLO-5 or supplements for royalty volumes which the state
is taking in kind. Rather, the lessee must submit the GLO-5 and supplements
for other volumes produced from the lease or leases.
(ii) A gas contract brief supplement (GLO-5(s)) may
be filed for sales of gas on the spot or other markets in which price
changes occur monthly. A GLO-5(s) should be submitted to the GLO within
30 days of the completion of each six-month period of sales. A GLO-5
does not have to be submitted as long as other contract provisions
remain unchanged.
(iii) For spot or similar sales situations in which
supplements will be submitted, the GLO-5 is due within 30 days of
the completion of the first six-month sales period.
(iv) Gas contract briefs and supplements should be
directed to: General Land Office, Energy Resources Division, Stephen
F. Austin Building, 1700 North Congress Avenue, Austin, Texas 78701-1465,
Attention: Gas Contracts Administrator.
(J) Settlements and judgments. Lessee shall file with
the GLO a copy of each settlement reached or judgment rendered in
a dispute between the lessee and a purchaser regarding production
from, and/or contracts relating to, state lands. Lessee shall file
these documents with the GLO within 30 days of entering into any such
settlement or within 30 days of the rendering of such judgment.
(K) Other records. At any time, or from time to time,
the GLO may require any additional records relating to any aspect
of lease operations and accounting.
(L) Responsibility of lessee to file royalty payments
and required reports. Parties other than the lessee may remit royalties
to the state on the lessee's behalf. This practice does not relieve
the lessee of any statutory or contractual obligation to pay royalty
or file reports and supporting documents. The lessee bears full responsibility
for paying royalties and for filing reports and supporting documents
as required in this chapter.
(M) Cooperation of operators, purchasers, payors, reporters,
and lessees. The GLO recognizes that lessees may often delegate various
lease obligations to third parties. However, such a delegation does
not relieve a lessee of these obligations. Lessees must be aware that
the acts and omissions of these third parties regarding these obligations
may subject a lease to a delinquency penalty or forfeiture. Therefore,
these parties must cooperate to responsibly discharge their obligations
to each other and to the state.
(N) State's lien. The state has a statutory first lien
on all oil and gas produced from the leased area to secure the payment
of all unpaid royalty or other sums of money that may become due.
Acceptance of an oil and gas lease from the state grants to the state
a contractual first lien on and security interest in all oil and gas
extracted from the lease area, all proceeds that may accrue to the
lessee, and all fixtures on and improvements to the area covered by
the lease that may be used in the production or processing of oil
and gas.
(O) Certification of sufficient royalties. The GLO
will not be responsible for certifying, prior to the rental anniversary
date, that sufficient royalty has been received to obviate the necessity
of paying rentals or minimum royalties as may be required by lease.
Lessees should maintain adequate records relating to lease royalty
and rental status to determine if additional liability exists. If
there is uncertainty concerning whether or not rental or minimum royalties
are due, a lessee may maintain a lease in effect by remitting the
annual amount required under each lease. The GLO will refund or grant
credit to lessees for payments received in this manner that are later
found to have not been due.
(P) Partial payments. The GLO will apply a lessee's
partial payment of amounts assessed (delinquent royalties, penalty,
and interest) first to unpaid penalty and interest and then to delinquent
royalties. Penalty and interest will continue to accrue until the
delinquent royalties are fully paid.
(3) Penalties and interest.
Cont'd... |
