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2008 Legislation

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2008 Legislation

HB 1128 - ACT 115

It has been brought to our attention that there is some confusion regarding HB 1128 (Act 115) and its effects on landowners. It does not have any effect on land (mineral) owners. It only impacts the working interest owner who has acquired an oil and gas lease from the land (mineral) owner. HB 1128 did not bring about a new law, it only changed the EXISTING LAW from 100% to 200% penalty for entities owning an Oil and Gas lease and having a working interest ownership in a unit. Most surrounding states have the same law, but the penalty is between 300% and 600%. Following is a summary of HB 1128:

HB 1128 (Act 115) does not apply to a private landowner (mineral owner) who has not leased his minerals and it has no impact on a landowner who did lease his land.

HB 1128 (Act 115) applies to the leasehold (acreage leased to oil company or investors) interest owner in a unit that elects to not participate and not pay its share of the attributed costs of the drilling a well.

HB 1128 has no impact on a mineral owner regardless of whether he leases or does not lease.

Letter on HB 1128 (ACT 115) from Representative Henry Burns

If you have any questions about HB 1128, Please contact Gifford Briggs at 225-388-9525.

SUBJECT: Unleased  Interest  Risk Charge  Clarification

Over  the  past  several  months I  have  received  numerous calls  and inquiries  concerning  the  impact  of  Act 115  of  the  2008  Regular  Session  on unleased  mineral  interest.  The  purpose  of the  bill,  originally  introduced  as  House Bill  1128  by  myself,  was  to  make it  less  attractive  for " lease  busters " to  present  themselves  as  participants  and subsequently  reneging  on  paying  their  part of  the  terms  of  the  contract  creating the  royalty.  Act  115  accomplished  this by  doubling  the  risk  of  charge  for those  individuals,  and  does   nothing else. To  simply  put  it,  it  had  no impact,  no  change  concerning  unleased  interest.

In  the  statute  amended  by Act  115, La. R.S. 30:10, specifically  states  the  risk  of charge  does  not  apply  to unleased  interest:

" (e) The  provision  of  Para 2 (b) above  with  respect  to the  risk  charge SHALL NOT APPLY  TO  ANY  UNLEASED  INTEREST  not subject  to  an  oil & gas  and  mineral lease. Not  withstanding  the  provisions of Para 2 (b)  the  royalty  owner  and  overriding royalty  owner  shall  receive  that  portion of  production  due  to  them  under  the terms  of  the  contract  creating  the royalty." (A) (2) (e)

Without  a  doubt  it  would have  helped  for  clarity's sake  for  the above  paragraph  to  be  included  in  Act 115.  However,  as  this  provision  was not  amended,  it  is  not in  the  text of  the  act.

It  should  further  be  noted, if  agents  of  oil & gas  companies  used Act  115  FALSELY  in  order  to  gain a  leased  of  mineral  interest,  a  court may  find  the  consent  of  the  mineral interest  owner  to  enter  into  the lease  vitiated  by  error  or  fraud.  I would  advise  such  mineral  interest  owners to  consult  an  attorney.

The  Commissioner  of  Conservation, Mr.  James " Jim " Welsh,  has  been consulted  about  these  deceptive  practices. Mr. Welsh  and  his  staff  agrees  that  Act 115  did not  affect  unleased  interest  and the  unscrupulous  individuals  claiming  otherwise during  lease  negotiations  are  engaged  in fraudulent  behavior.

I  want  to  assure  the mineral  interest  owners  of this  great  state that,  I  respect  their  rights  to sovereignty  as  I  do  their  right  to freedom  of  speech  and  the  right  to bear  arms.  These  rights  sets  us  apart from  many  countries  and  has  made  this country  the  Great  Beacon  of  Hope  and Freedom  and  Free  Enterprise.

Sincerely,
State  Representative  Henry  Burns
District  9