Utah-Oil & Gas/SITLA Adopts New Oil And Gas Rules

摘要

Effective April 1,2005, the Utah School and Institutional Trust Lands Administration (SITLA) adopted new Minerals Rules R-850-21 through R-850-27 and deleted old Minerals Rules R850-20 in their entirety. New Rule R850-21 covers oil, gas, and hydrocarbon resources. The new rules can be viewed at SITLA's website at http://www.utahtrustlands.com. The new oil and gas rules include several important changes. First, the new rules limit the total allowed burdens on a lease to 20 percent. Utah Admin. Code Rule R850-21-600(2)(h). Under the rule, assignments of overriding royalty interest must be approved by SITLA to be effective and SITLA will not approve any assignment if the cumulative burdens on the lease, including the royalty due to SITLA, are greater than 20 percent, The rule makes no exception for those leases issued by SITLA that reserve a royalty greater than the standard 12.5 percent. There may be instances when this limitation will make it difficult for leases to be marketed to third parties when the retention of an overriding royalty interest is part of the consideration paid.