A. A royalty interest owner who has a right to sell royalty gas in kind may do so as described in the agreement creating such right, but in no event upon less than sixty (60) days' prior written notice to its lessee or lessees and the operator. Solely for purposes of revenue allocation under the Production Revenue Standards Act, the interest of a royalty interest owner selling gas and the working interest burdened thereby shall each be regarded as part royalty interest and part working interest, in the same percentages that the royalty and working interests are provided in the lease. A royalty interest owner selling gas shall remit the royalty share of its gas sales to the operator in the same manner as any other producing owner.

B. If metered, consumption of gas from a well by a royalty interest owner or surface owner wherein there is no sale of such gas shall be deemed production by the working interest owner burdened by the contractual right to consume gas and shall be accounted for at the average price, weighted by volume, of gas from that well sold by such working interest owner during that month. In the absence of a sale by such working interest owner, the average price, weighted by volume, of gas from that well sold by all producing owners during that month, shall be used.

C. A burdened working interest owner and the operator shall have the right to accomplish the accounting required pursuant to this section by offset or adjustment.

D. Royalty gas taken in kind by the Commissioners of the Land Office shall be considered consumption of gas from a well by a royalty interest owner and shall be deemed production by the working interest owner burdened by the contractual right of the Commissioners of the Land Office to take such gas in kind. Such gas shall be accounted for by the working interest owner so burdened at the average price, weighted by volume, of gas from that well sold by such working interest owner during that month. In the absence of a sale by such working interest owner, the average price, weighted by volume, of gas from that well sold by all producing owners during that month shall be used. The Commissioners of the Land Office shall account to such working interest owner for such royalty gas taken in kind at the average price, weighted by volume, of gas from that well sold by all producing owners during that month.

Added by Laws 1992, c. 190, § 6, eff. July 1, 1993.