COMMINGLING

If oil or gas in which there exists more than one oil and gas lien is commingled with other oil or gas in such a manner that the identity of the specific oil or gas is lost, then the oil and gas lien continues without interruption into and attaches to any such resulting commingled product and is perfected automatically as of the date of its original perfection but only as to volumes out of the commingled product equal to the volume of product to which the oil and gas lien originally attached. In such event, the oil and gas lien in the commingled product has priority over any security interest or other lien that is not an oil and gas lien or permitted lien, whether or not the security interest or other lien has been properly perfected. If more than one oil and gas lien attaches to the commingled product, then the oil and gas liens rank equally in the proportion that the respective sales prices secured by each oil and gas lien bears as a percentage of the total of the sales prices secured by all oil and gas liens applicable to the production at the time the production was commingled. This section is intended to recognize the continuation of oil and gas lien rights of an interest owner in the commingled product stream only as to a volume of oil or gas proportionate to the volume of oil or gas that originated from such interest owner, with that volume of the commingled product being considered to have maintained a distinct identity as being available for sale or transportation under the specific contractual arrangements applicable to the production at the time it entered the commingled product stream.

Added by Laws 2010, c. 142, § 5, emerg. eff. April 19, 2010.