S.B. 360
Passed - March 2, 2018
Signed by Governor - March 9, 2018
Effective -- May 31, 2018
Summary of S.B. 360
SB 360 applies to flat rate royalty leases, i.e. leases for which the royalty is not "inherently related to the volume of oil and gas so extracted, produced, and marketed," and the conditions upon which a well work permit may be issued. The law proposes to reverse the West Virginia Supreme Court decision in Leggett v. EQT dated May 26, 2017, 239 W.Va. 264, 800 S.E.2d 850, which held post-production costs may be deducted from the 1/8th royalty share imposed by W. Va. Code § 22-6-8(d) for flat rate royalty leases subject to new permits. Note this legislation does not give relief to lessors whose royalty clauses are linked to the volume of oil and gas extracted, produced or marketed regardless of how small the negotiated volumetric royalty rate.
SB 360 expressly imposes a condition on the issuance of a well work permit by the West Virginia Department of Environmental Protection that the owner of the oil and gas in place shall be tendered "not less than one-eighth of the gross proceeds, free from any deductions for post-production expenses, received at the first point of sale to an unaffiliated third-party purchaser in an arm's length transaction for the oil or gas so...
Passed - March 2, 2018
Signed by Governor - March 9, 2018
Effective -- May 31, 2018
Summary of S.B. 360
SB 360 applies to flat rate royalty leases, i.e. leases for which the royalty is not "inherently related to the volume of oil and gas so extracted, produced, and marketed," and the conditions upon which a well work permit may be issued. The law proposes to reverse the West Virginia Supreme Court decision in Leggett v. EQT dated May 26, 2017, 239 W.Va. 264, 800 S.E.2d 850, which held post-production costs may be deducted from the 1/8th royalty share imposed by W. Va. Code § 22-6-8(d) for flat rate royalty leases subject to new permits. Note this legislation does not give relief to lessors whose royalty clauses are linked to the volume of oil and gas extracted, produced or marketed regardless of how small the negotiated volumetric royalty rate.
SB 360 expressly imposes a condition on the issuance of a well work permit by the West Virginia Department of Environmental Protection that the owner of the oil and gas in place shall be tendered "not less than one-eighth of the gross proceeds, free from any deductions for post-production expenses, received at the first point of sale to an unaffiliated third-party purchaser in an arm's length transaction for the oil or gas so...
