Section 75-58-9 - Duties and responsibilities of operators marketing gas of non-operators; payments(a) On or before ten (10) days after the filing with the board of the initial test results for a gas well or oil well capable of producing gas in commercial quantities, the operator shall furnish, by United States mail, postage prepaid, a copy of the initial test results for the well filed with the board to all non-operators owning a record title interest in the production unit for such well as of a date not more than ninety (90) days prior to the filing with the board of the application to drill. Upon furnishing the initial test results to all non-operators, the operator shall file with the board a list of all non-operators. Should the address of any non-operator be unknown to the operator after diligent search and inquiry, the operator shall so notify the Board, and any such non-operator shall be deemed for all purposes of this chapter as a consenting non-operator.
(b) The operator shall market the gas of all non-operators in a well subject to this chapter except as follows: (1) any non-operator (a "nonconsenting non-operator") who delivers a written notification to operator's office within thirty (30) days after the mailing to such non-operator the test results required by subsection (a) of this section that such non-operator will be responsible for and will market its share of gas and (2) as otherwise provided herein. After the thirty (30) day notice period has expired, operator shall send a notice to the board identifying which non-operators have elected to be or have been deemed to be consenting non-operators and which non-operators have elected to be nonconsenting non-operators. The operator shall have no obligation to market the gas attributable to any nonconsenting non-operator.(c) In fulfilling operator's responsibility to market consenting non-operator's gas pursuant to subsection (b) of this section, operator has the continuing option of marketing consenting non-operator's share of gas pursuant to a short-term contract or submitting a qualifying long-term contract to the consenting non-operators. Should operator desire to market consenting non-operators' share of gas under a long-term contract in a well which is subject to this chapter on or after the date upon which the application to drill the well is filed with the board, operator shall submit by United States mail, postage prepaid, to the consenting non-operators a qualifying long-term contract. Should a consenting non-operator not accept such offer by executing and delivering to the operator at operator's office the qualifying long-term contract within thirty (30) days after the date that operator placed the qualifying long-term contract in the United States mail, then and in such event, the offer to purchase shall be deemed to have expired and such consenting non-operator shall be deemed to have become a non-consenting non-operator at the expiration of such thirty (30) day period, and operator shall thereafter have no further obligation to market the gas owned by that consenting non-operator. The operator shall furnish to the buyer the qualifying long-term contract executed by the consenting non-operators, and shall furnish to the Board a notice designating those consenting non-operators which have become nonconsenting non-operators. Save and except where the buyer of gas is contractually obligated to operator to offer a qualifying long-term contract to the consenting non-operators, nothing herein contained shall be deemed to constitute an obligation on the part of any buyer of gas to offer a qualifying long-term contract. This chapter shall not be construed to enlarge or alter in any way any purchaser's obligations under any gas purchase contract.
In marketing consenting non-operator's share of gas under a short-term contract, operator shall market the gas of the consenting non-operators upon such terms and conditions as a reasonably prudent operator would market such gas; provided, however, that in fulfilling such obligation, operator shall incur no liability to the consenting non-operator save and except as to acts of willful misconduct or gross negligence. In the event operator intends to market consenting non-operator's share of gas under a short-term contract with an affiliate or subsidiary of operator, operator shall so notify the consenting non-operators.
(d) Any consenting non-operator shall have the right to become a nonconsenting non-operator by delivering to operator a written notice thereof at least sixty (60) days prior to any yearly anniversary of the date that the operator filed the initial test results with the Board. Such an election shall become effective on the later to occur of: (i) the next anniversary of the date that the operator filed the initial test results with the Board, or (ii) the expiration date of the gas purchase agreement then covering the consenting non-operator's share of gas. Operator shall thereafter have no further obligation to market the gas owned by any consenting non-operator electing to become a nonconsenting non-operator. Operator shall furnish to the Board a notice identifying any consenting non-operator who has elected to become a nonconsenting non-operator.(e) Should a change of operator occur with respect to a well which is subject to this chapter, the successor operator shall furnish to all consenting non-operators within thirty (30) days after assuming operations of such well a notice of change of operator. Any consenting non-operator shall have the right to become a nonconsenting non-operator by furnishing to the successor operator a written notice advising the successor operator of same within thirty (30) days after the operator places in the United States mail, postage prepaid, the notice required by this subsection (e), with such consenting non-operator to become a nonconsenting non-operator effective on the later to occur of (i) the expiration date of the gas purchase agreement then covering such consenting non-operator's share of gas, or (ii) the first day of the second month after the date of the consenting non-operator's written notice to the successor operator. Operator shall send a notice to the Board identifying any consenting non-operators who have elected to become nonconsenting non-operators.
As to the remaining consenting non-operators, the successor operator shall market the gas of such consenting non-operators in accordance with the terms and provisions of this chapter.
(f) The net proceeds from the sale of the consenting non-operator's share of gas production shall be paid by the buyer to the operator. The operator shall not be responsible for the payment of any taxes or encumbrances with respect to the net proceeds except as specifically provided herein. The operator shall pay, for and on behalf of itself and the consenting non-operators, any severance, privilege and/or maintenance taxes due on the production of gas marketed by the operator. Save and except as otherwise provided in this chapter, or by law, the net proceeds derived from the first sale of the consenting non-operator's share of gas shall be paid by the operator to the consenting non-operators within one hundred twenty (120) days after the date of receipt by the operator of the net proceeds derived for such first sale of production, and thereafter no later than sixty (60) days after the date of receipt by the operator of the net proceeds for subsequent production of the consenting non-operator's share of gas. Save and except as provided by Section 53-3-7, Mississippi Code of 1972, the consenting non-operators shall be and shall remain responsible for the payment of any proceeds due any royalty, overriding royalty and/or production payment which burden and/or encumber the interest of such consenting non-operators, and the operator shall have no liability to any owner of royalty, overriding royalty and/or production payment which burdens and/or encumbers the interest of the non-operators where the operator pays the net proceeds derived from the sale of the consenting non-operator's share of gas as herein provided. The operator and the consenting non-operators shall have no liability to any owner of royalty, overriding royalty and/or production payment which burdens and/or encumbers the interest of the nonconsenting non-operators.(g) A non-operator's rights under this chapter shall not be affected by his status as a consenting or nonconsenting owner under Section 53-3-7, Mississippi Code of 1972; provided, however, during any period of the recovery of cost or alternate charges, the share of production from the pooled unit well attributable to the nonconsenting owner's nonconsenting interests therein shall be delivered to his purchaser or market, if any, with the proceeds received therefrom to be paid by the purchaser to the operator for the account of the operator and the appropriate consenting owners; if, however, the nonconsenting owner does not have a purchaser or market which is taking the production, then such share of production shall be sold by the operator to the operator's purchaser or market, with the proceeds received therefrom to be paid by the purchaser to the operator for the account of the operator and the appropriate consenting owners.Laws, 1991, ch. 490, § 5, eff. 7/1/1991.