55-1614. Interest payments on payments from oil or gas production; definitions.
55-1614
55-1614. Interest payments on payments from oil or gas production;definitions.As used in this act:
(a) "Payee" means any person or persons, or a court of competentjurisdiction, to whom payment of revenues accrued from the first sale of oil orgas from an oil or gas well located in Kansas should be made, whether the samearises from ownership of the proceeds or an interest in the producing propertyor a contract right to receive or disburse the payment.
(b) "Payment" means the sum to be paid to a payee by a payor arising frompayee's interest in a first sale of oil or gas occurring on or after theeffective date of this act.
(c) "Payor" means:
(1) The first purchaser of production of oil or gas from an oil or gas well. If the first purchaser makes payment to a third party for distribution topayee, the first purchaser is a payor as to the third party to whom payment ismade, or
(2) any person who has entered into an agreement with the first purchaser tomake payment to payee and receives moneys from the first purchaser fordistribution pursuant to such agreement.
(d) "First sale" means the transfer of ownership of oil or gas firstoccurring after its severance from the ground.
(e) "First purchaser" means the owner of the oil or gas after consummationof a first sale.
(f) "Initial sale" means that first sale first made in time after a wellcommences initial oil or gas production, excluding any sale of frac oil or swaboil.
(g) "Person" means any individual, corporation, limited partnership,partnership, association, joint stock company, living trust, irrevocable trust,trust where the interest of the beneficiaries are evidenced by a security, anunincorporated organization, a government, a political subdivision ofgovernment, or any combination thereof.
(h) "Interest rate provided herein" means that rate equal to one andone-half percentage points above the interest rate charged on loans todepository institutions by the New York Federal Reserve Bank at the start ofbusiness on the first business day of each month, unless the payor segregatesthe payment from its operating funds and deposits the same in a demand depositaccount with a federally insured bank or savings and loan institution thatearns interest at the highest rate being offered by that institution for theamount due payee by payor in such account, in which case the "interest rateprovided herein" means the interest rate actually earned by payor on thataccount.
(i) "Excluded payments" means:
(1) Payments which in the aggregate of 12 months'accumulation of oil or gas proceeds to one payee do not exceed $100, provided such excludedpayments are disbursed annually if exceeding $10, and provided that uponwritten request of the payee, such excluded payments are disbursed monthly ifexceeding $25; or
(2) payments which in the aggregate of the accumulation of oil or gasproceeds to one payee do not exceed $10, provided such excluded payments aredisbursed when production from the relevant well or wells ceases or when thepayor's responsibility for making payment for production ceases, whicheveroccurs first, and provided that upon written request of the payee, suchexcluded payments are disbursed annually.
Before proceeds greater than $25 may be accumulated,the payor shall provide notice to the payee that there is an option to be paidmonthly for proceedsgreater than $25. Such notice to the person shall also provide directions forrequesting monthly payment and constitutes notice to all heirs, successors,representatives and assigns of the payee.
History: L. 1991, ch. 160, § 1;L. 1996, ch. 100, § 1; July 1.