| (v) The GLO anticipates that those payors that have
exceeded the threshold sums set out in clauses (i) - (iii) of this
subparagraph in the preceding state fiscal year will also exceed those
sums in the current state fiscal year. The application of clauses
(i) - (iii) to a specific payor may be waived at the commissioner's
discretion to the extent allowed by law, upon a showing that a payor
will not exceed the threshold sums set out in clauses (i) - (iii)
in the current fiscal year, or for other good cause.
(vi) The GLO will notify each payor to whom this subparagraph
applies in compliance with 34 Texas Administrative Code Chapter 15.
(B) Information required with royalty payments. Lessees
shall submit all royalty payments in a manner which identifies the
assigned GLO lease number, the annual submission certification number,
if any, and the amount of oil and gas royalty being paid. Royalty
payments not identified by the lease number and the annual submission
certification number, if any, shall be considered delinquent and shall
be subject to the delinquency provisions of paragraph (3) of this
subsection.
(C) Required reports. Lessees shall provide, in the
form and manner prescribed by the GLO, production/royalty reports
(Form GLO-1 for oil and condensate and Form GLO-2 for gas), other
required reporting documents for gas or oil and condensate, and other
supporting documents required by GLO to verify gross production, disposition,
and market value of the oil and condensate, gas, and other products
produced therefrom. Reporters for leases which the GLO has approved
for annual royalty payments may submit such reports on an annual basis
as well after receipt of an annual royalty certification number. Parties
approved for annual reporting or payment shall notify the GLO in writing
within ten business days of a complete release, forfeiture, termination,
assignment, or change of operator or payor of a lease approved for
annual reporting and payment. Failure to comply with the statutes
and the reporting requirements of this chapter may subject a lease
to forfeiture, delinquency penalties, or both.
(D) Timely receipt of royalty payments and reports.
(i) For the purpose of this subsection, the GLO will
consider a report timely received if the report:
(I) arrives postpaid and properly addressed; and
(II) is deposited with the United States Postal Service
or any parcel delivery service at least one day before it is due and
such deposit is evidenced by a postmark, a postal meter stamp, or
a receipt.
(ii) For the purpose of this subsection, the GLO will
consider a royalty payment timely made if:
(I) the payment is received by electronic funds transfer,
it is received on or before the date it is due (please be advised
that delivery of payment to the state comptroller's office does not
satisfy this requirement. Due to the time required by the comptroller's
office to process a payment and forward it to the GLO, payors are
strongly encouraged to submit payments to the comptroller's office
before 6:00 p.m. CST on the business day preceding the business day
on which the payment is due).
(II) the payment is not made by electronic funds transfer,
it arrives postpaid and properly addressed and it is deposited with
the United States Postal Service or any parcel delivery service at
least one day before it is due and such deposit is evidenced by a
postmark, a postal meter stamp, or a receipt.
(iii) If a royalty payment or report is due on a Sunday
or a legal state or federal holiday, then lessees shall ensure that
such payment or report is either received by the GLO on the next calendar
day which is not a Sunday or a holiday, or postmarked or stamped prior
to the next calendar day which is not a Sunday or a holiday.
(E) Oil and condensate royalties--due date.
(i) Lessees shall ensure that all oil and condensate
royalties, except royalties approved by GLO to be paid on an annual
basis, are timely received by the GLO on or before the fifth day of
the second month following the month of production.
(ii) Upon application to and written approval by the
GLO, future royalties attributable to leases for which oil, condensate,
and gas royalty due for the immediately preceding September 1 to August
31 period equaled $3, 000 or less may be paid on an annual, rather
than monthly, basis. A party who is both a payor and a reporter for
a lease shall submit both payments and reports on a monthly or, if
the GLO grants approval, an annual, basis.
(I) The applicant shall designate the payor who will
submit the annual royalty payments and, if there are multiple payors
for a lease, the share of royalty the designated payors will submit.
Upon approval, GLO staff will assign an annual submission certification
number to the designated payor and the GLO will authorize the designated
payor to submit the designated share of royalty payments on an annual
basis. The applicant shall notify the GLO in writing of any change
in the payor designation within ten business days of its effective
date.
(II) Payors, after approval, shall pay annual royalties
for the following January 1 to December 31 annual production periods.
(III) Payors, after approval, shall continue to make
payments on a monthly basis until the commencement of the next annual
production period.
(IV) Each year, payors shall ensure that all annual
oil and condensate royalties are timely received by the GLO on or
before the fifth day of February following each annual production
period. Each year, payors shall ensure that all annual gas royalties
are timely received by the GLO on or before the 15th day of February
following each annual production period.
(V) After the payor receives GLO approval for annual
royalty payments, if the total annual oil, condensate, and gas royalty
due under a lease exceeds $3,000 for any annual production period,
payors shall resume making monthly royalty payments starting with
the January production month immediately following that annual production
period.
(VI) For any royalty approved to be paid on an annual
basis, payors shall ensure that the total royalties that have accrued
as of the date of a complete lease forfeiture, release, termination,
assignment, or any change of designated payor, are timely received
by the GLO on or before 75 calendar days after that date. If a change
of payor occurs for a lease with multiple payors, only the changing
payor shall pay the accrued royalties 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 payor, does not affect the approved annual
royalty payment 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
royalty 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
royalty payments. 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.
(F) Gas royalties--due date.
(i) Lessee shall ensure that all gas royalties, except
royalties approved by GLO to be paid on an annual basis, are timely
received by the GLO on or before the 15th day of the second month
following the month of production.
(ii) The provisions of subparagraph (E)(ii)(I) - (X)
of this paragraph apply to the payment of gas royalties.
(G) Required reports--due date.
(i) Lessees shall ensure that all required production/royalty
reports and other required documents (hereafter "reports" in subparagraph
(G) of this paragraph), in whatever format submitted, for gas or oil
and condensate are timely received by the GLO on or before the due
date of the corresponding monthly royalty payment.
(ii) Upon application to and written approval by the
GLO, future reports for leases for which oil, condensate, and gas
royalty due for the immediately preceding September 1 to August 31
period equaled $3,000 or less may be submitted on an annual, rather
than monthly, basis. A party who is both a payor and a reporter for
a lease shall submit both payments and reports on a monthly or, if
the GLO grants approval, an annual, basis.
Cont'd... |
