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Committee backs oil-and-gas owners'lien bill to protect royalty and producer payments
Summary
HB 1273, presented by Representative Stuart Smith and attorney Blair Arnold, would give royalty owners and producers lien protection in certain bankruptcy scenarios. Arnold cited an Oklahoma bankruptcy involving a company called CMO that left producers across states unpaid.
Representative Stuart Smith and attorney Blair Arnold presented HB 1273 as an "oil and gas owners lien act" designed to protect landowners and royalty owners when a well operator or purchaser becomes bankrupt or enters receivership. Arnold said the bill would create a legal mechanism to protect royalty payments that otherwise could be treated as general unsecured claims in bankruptcy.
Arnold described the bill as modeled on legislation enacted in Oklahoma after a large bankruptcy involving a purchaser called CMO. He said producers in Oklahoma lost about $127,000,000 when a Delaware bankruptcy court characterized their claims as general unsecured creditor claims; the Oklahoma legislature responded with a statute intended to prevent similar outcomes. Arnold told the committee that, under current practice, royalty owners seeking a lien that survives bankruptcy must enter a security agreement, file a financing statement with the secretary of state and renew such filings (he said renewals occur every three years), steps many producers do not complete.
No members of the public registered opposition. After questions from committee members, the committee moved and passed HB 1273 by voice vote.
