36-6-101. Terms of leases; extensions; rules and regulations; rent androyalties; assignment of leases; grazing and agricultural leases; cooperationwith United States or its lessees, in cooperative or unit plans.
(a) The board of land commissioners may lease any state orstate school lands for oil and gas for a primary term up to ten (10) years andas long thereafter as oil or gas may be produced in paying quantities, and mayextend the term of existing oil and gas leases in good standing for as long asoil or gas may be produced in paying quantities.
(b) The board is further authorized to make and establish rulesand regulations governing the issuance of oil and gas, coal and other mineralleases and covering the conduct of development and mining operations.
(c) Mineral leases may be issued upon such monthly or annualminimum rental payment basis as shall be fixed by the board, which paymentshall be annually applied against such royalty as shall accrue for the samelease year by the terms of such lease, which royalty, as to lands leased foroil or gas shall not be less than five percent (5%) of all oil and gas producedand saved from and not used in operations on the lands under the lease, androyalty of not less than five cents ($.05) per ton on coal produced from thelands under any such lease for coal purposes, such royalty to be paid on minerun of coal. No mineral lease issued under the provisions of this section shallbe assignable or transferable except with written consent of the director,subject to criteria established by the board, and he shall require the lessee'sfull compliance with and observance of all rules and regulations adopted by theboard and for the lessee's compliance with all other terms of the lease. Allmineral leases issued pursuant to this section shall be separate and distinctfrom each lease of the same land for grazing or agricultural purposes, issuedby the board, and rules and regulations adopted by the board as hereinauthorized, shall provide for joint use of such lands for grazing andagricultural or mineral purposes without undue interference by the lesseesunder any such class of leases with lessees under any other such class.
(d) The director, subject to criteria established by the board,on behalf of the state, and its lessee or lessees in any such mineral lease arehereby further authorized to join, in the interest of conservation and greaterultimate recovery of oil and gas, in fair and equitable cooperative or unitplans of development or operation of oil and gas pools, with the United Statesgovernment and its lessees, or permittees, or others, or any of them, and thedirector, subject to criteria established by the board, is hereby authorized tomodify and change any and all terms and conditions of any such oil and gaslease or leases, heretofore or hereafter issued, as mutually agreed by thelessor and lessee in any such lease, as required to conform to the terms of anysuch lease to such cooperative or unit plan and as required to effectuateproper operations thereunder, which changes may include extension of the termof years otherwise applicable to any such lease, for the full period of timeduring which such cooperative or unit plan may remain in effect.
(e) When a cooperative or unit agreement is terminated orceases to be effective as to lands upon which there is no production of oil orgas, the lease covering such lands shall remain in effect for a period of two(2) years from the date such lands ceased to be subject to said agreement, orfor the remaining length of the term of the original lease, whichever shall bethe greater, and so long thereafter as oil or gas is produced from said landsin accordance with the requirements of the original lease.
(f) The terms of any lease issued under this section for landon which actual drilling operations were commenced prior to the end of itsprimary term and are being diligently prosecuted at that time shall be extendedfor one (1) year and so long thereafter as oil or gas is produced in payingquantities.
(g) All natural gas leases executed hereunder shall providethat the state of Wyoming may require the lessee to dedicate all the naturalgas produced on lands owned by the state for the use or benefit of the peopleof the state of Wyoming.
(h) If the state board of land commissioners determines itwould benefit the people of the state to have the natural gas dedicated, theboard may arrange for the sale of the natural gas for the use of the people ofthe state or arrange for the exchange of the natural gas produced withproducers of natural gas produced from lands not owned by the state if theexchange will benefit the people of the state. If the board determines thededication would not be in the public interest; or would cause waste as definedby W.S. 30-5-101; or would unreasonably deny the lessee the opportunity toeconomically market the natural gas, it may waive dedication.
(j) The board shall adopt and promulgate necessary rules andregulations to carry out the provisions of subsections (g), (h) and (j) of thissection.
(k) The board, on behalf of the state, and its lessee orlessees in coal and other mineral leases, may approve cooperative miningdevelopment plans established for the purpose of development of the mineralresources in an efficient and economical manner and in accordance with soundengineering practice. The board may also modify and change any and all termsand conditions of any coal and other mineral lease or leases, heretofore orhereafter issued, as mutually agreed by the lessor and lessee in the lease. Thedirector, subject to criteria established by the board, may conform the termsof the lease to a cooperative mining development plan required to effectuateproper operations, with changes that may include extension of the term of yearsotherwise applicable to the lease, for the full period of time during which thecooperative mining development plan may remain in effect. A cooperativedevelopment plan may consist of one (1) or more private, state or federalleaseholds or mineral interests. All lands in a cooperative mining developmentplan shall be under the effective control of a single operator, capable ofbeing developed and operated as a single operation.
(m) The director, subject to criteria established by the board,may lease any state or state school lands for coal and other mineral purposesfor a primary term of not exceeding ten (10) years. Lessee shall have theexclusive right to renew the lease for successive terms of ten (10) years each,if at the time application for renewal is filed:
(i) Coal or other minerals covered by the lease are actuallybeing produced from the leased lands and the lessee is complying with all leaseterms; or
(ii) The leased lands are committed to a cooperative miningdevelopment plan approved by the board and coal or other minerals are actuallybeing produced from the cooperative mining development plan and the lessee iscomplying with the plan and all lease terms; or
(iii) The lessee is proceeding in good faith to develop theleased lands; or
(iv) If the lessee shows to the satisfaction of the director orthe board that production of coal or other minerals has been delayed by thenecessity of obtaining licenses, permits, or other approvals from governmentalauthorities and that the lessee has used reasonable diligence in an effort toobtain the licenses, permits or other required authorizations.
(n) As used in subsection (m) of this section, good faithdevelopment means the substantial expenditures or firm commitments forexploration, engineering, environmental studies, hydrological studies orresearch and development which is required for development of the lease. Toassist the lessee in planning for the orderly development of the lease orleases, the lessee may submit to the board at any time during the term of thelease or leases a schedule and discussion of proposed expenditures orcommitments for the development of the lease or leases. After reviewing theschedule and discussion, the board shall issue a ruling in writing withinninety (90) days binding upon the state and the lessee, determining whether ornot the proposed expenditures or commitments, when and if actually made bylessee, shall qualify as "substantial expenditures or commitments" soas to constitute "good faith development" within the meaning ofsubsection (m) of this section.
(o) Any mineral lessee or producer shall report all productionincluding total volume, value and disposition of the mineral production underany lease, unit or communitization agreement in a timely manner and in suchform as determined by the board. Any person failing to comply with thissubsection shall be subject to penalties enacted by the board or thecancellation of the lease or agreement under which they are operating.
36-6-102. Submission, custody and confidentiality of subsurface logreports.
(a) Contingent upon the leasing of any state or state schoollands for coal, uranium or other mineral exploration, the board of landcommissioners shall require copies of all electrical, gamma-ray neutron,resistivity or other types of subsurface log reports, and all assay reports forany rock cores or cuttings to be submitted to the office of the state geologistwithin ninety (90) days after completion of drilling and completion ofassociated reports. Reports submitted to the oil and gas conservationcommission are deemed to satisfy the requirements of this subsection.
(b) All subsurface log reports and assay reports will be heldconfidential for a period of three (3) years after initial receipt by the stategeologist. Confidentiality may be extended in one (1) year increments uponreceipt by the state geologist of a written request by certified mail, returnreceipt requested, from the person or legal entity requesting thatconfidentiality be extended. All requests must be received prior to theexpiration of the period of confidentiality. All reports filed under thissection shall become the property of the state to be retained within thepermanent files of the Wyoming geological survey board for the use of theoffice and public after the period of confidentiality has expired.
36-6-103. Existing oil and gas leases ratified.
Theissuance of all oil and gas leases upon any state or school lands heretoforeissued by the board of land commissioners for primary terms up to ten (10)years and as long thereafter as oil or gas may be produced in payingquantities, and the granting of all extensions heretofore granted by the boardof land commissioners of the terms of existing oil and gas leases upon anystate or state school lands for as long after the primary term as oil or gasmay be produced in paying quantities, are hereby ratified, confirmed, andvalidated. Each joinder by the board of land commissioners on behalf of thestate of Wyoming in any cooperative or unit plan of development or operation ofany oil or gas pool, and all modifications and changes in any of the terms orconditions of any oil or gas lease arising from any such joinder, or incidentthereto, and all thereof, are hereby ratified, confirmed, and validated.
36-6-104. Payment for improvements; "improvements" defined.
Ifmineral lands upon which improvements have been made shall be sold or if suchlands shall be leased to other than the owner of the improvements thereon, thensuch purchaser or such new lessee shall pay to the owner thereof the value ofsaid improvements, at an agreed price with the owner thereof; or if suchagreement cannot be reached, then at such price as shall be fixed byappraisement under the authority of the board of land commissioners. The word"improvements" shall be construed to mean surface improvements,machinery and other equipment used and necessary for the operation of the planton such land, and work performed in the development of the property foroperation and mining when such development work is of practical use in futuremineral operations on such land. Wells drilled for oil which do not produce oilin commercial quantities, shafts, tunnels or drifts from which coal or otherminerals have been practically exhausted, shall not be considered asimprovements.
36-6-105. Inspection reports.
Thestate geologist or any state coal mine inspector shall, when requested by theboard of land commissioners, visit and make a report upon any lands held undercoal and mineral leases. Such report shall be made without any fee to theofficer making same.
ARTICLE 2 - COUNTIES, CITIES, TOWNS AND SCHOOL DISTRICTS
36-6-201. Authority to lease or otherwise contract.
Thegoverning body of any county, city, town or school district authorized toacquire and hold real property, may, upon determining that such action will bein the best interests of such county, city, town or school district, lease anylands owned in fee by such county, city, town or school district, for theexploration for and development and production of oil, gas or otherhydrocarbons, and otherwise contract for such exploration, development andproduction, upon such terms as such governing body may determine and as are notinconsistent with the provisions of this act; providing the exploration for,development and production of oil, gas or other hydrocarbons shall in no wayinterfere with the public use of said lands or the purpose for which said landswere acquired.
36-6-202. Power to modify or change leases or contracts.
Anysuch governing body may, by such lease or contract or by other agreement,include, or provide for the inclusion of, the lands of such county, city, townor school district, or any part or portion of such lands, with other lands inany plan or agreement for cooperative or unit development or operation for oil,gas or other hydrocarbons, and modify and change any and all terms of any leaseor contract heretofore entered into or hereafter entered into under theprovisions of this act, including the extension of the term of any such leaseor contract for the full period of time such cooperative or unit plan oragreement may remain in effect, as required to conform the terms of any suchlease or contract to such cooperative or unit plan or agreement.
36-6-203. Rules and regulations; requisites of leases or contracts.
(a) Any such governing body may, in its discretion, make andestablish such rules and regulations governing the issuance of such leases andcontracts as are not inconsistent with the provisions of this act. Any suchlease or contract:
(i) Shall be entered into pursuant to resolution duly adoptedby the governing body;
(ii) May cover parcels of land of such size and shape as thegoverning body may determine;
(iii) May be for a term not exceeding ten (10) years and as longthereafter as oil, gas or other hydrocarbons shall be, or can be, produced incommercial quantities from the lands included in such lease, except as suchterm may be extended pursuant to the provisions of W.S. 36-6-202; and
(iv) Shall reserve to the governing body a royalty of not lessthan one-eighth of all oil, gas or other hydrocarbons produced from said lands.
36-6-204. Existing leases, contracts and agreements validated.
Nothingin this act contained shall operate or be construed as in anywise limiting oraffecting the power or authority of the governing body of any county, city,town, or school district, to have entered into any lease or contract for theexploration for the development and production of oil, gas or otherhydrocarbons, or any agreement for cooperative or unit development or operationfor oil, gas or other hydrocarbons, entered into by such governing body priorto the passage of this act, and all such leases, contracts and agreementspreviously entered into in substantial compliance with the above provision arehereby validated and confirmed.
ARTICLE 3 - CALCULATION OF ROYALTIES ON OIL, NATURAL GAS ANDASSOCIATED NATURAL RESOURCE PRODUCTION
36-6-301. Definitions.
(a) As used in this article:
(i) "Associated natural resource" means anysubstance, element or compound, either gaseous, liquid or solid, associatedwith the production, refining or processing of oil or gas. The term includes,but is not limited to, propane, butanes, ethane, methane, carbon dioxide,sulphur, helium, nitrogen and natural gas liquids;
(ii) "Natural gas" means hydrocarbons ornonhydrocarbons which at atmospheric conditions of temperature and pressure arein a gaseous phase;
(iii) "Oil" means crude petroleum and otherhydrocarbons regardless of gravity which are produced at the wellhead in liquidform, and the liquid hydrocarbons known as distillate or condensate recoveredor extracted from gas, other than gas produced in association with oil andcommonly known as casinghead gas;
(iv) "Processing plant" means a plant to removeliquefiable hydrocarbons from a gas stream or to separate natural gas intophysically or chemically distinct marketable associated natural resources;
(v) "Return on investment" means a percentage rateapplied over a period of years to the equity investment for construction oftransportation facilities or processing plants for oil, natural gas orassociated natural resources. This percentage rate represents the rate alessee or successor in interest supposedly could have received from investmentof equity in some other commercial or financial undertaking. "Return oninvestment" also means a percentage of earnings or profitability ratiowhich a lessee, producer or successor in interest anticipates or desires toreceive on the equity investment in transportation facilities or processingplant;
(vi) "Transportation facilities" means thosefacilities constructed for moving any oil, natural gas or associated naturalresource from the place of production to the closest point of sale or to aprocessing plant.
36-6-302. "Return on investment" deduction not allowed forcalculation of royalty.
(a) For state lease royalty and overriding royalty, other thanroyalty owing to the United States of America, calculations for oil, naturalgas and associated natural resources, neither lessee nor any successor ininterest will be allowed any deduction for any "return on investmentcost."
(b) This article applies to all state leases of oil, naturalgas or associated natural resources.
36-6-101. Terms of leases; extensions; rules and regulations; rent androyalties; assignment of leases; grazing and agricultural leases; cooperationwith United States or its lessees, in cooperative or unit plans.
(a) The board of land commissioners may lease any state orstate school lands for oil and gas for a primary term up to ten (10) years andas long thereafter as oil or gas may be produced in paying quantities, and mayextend the term of existing oil and gas leases in good standing for as long asoil or gas may be produced in paying quantities.
(b) The board is further authorized to make and establish rulesand regulations governing the issuance of oil and gas, coal and other mineralleases and covering the conduct of development and mining operations.
(c) Mineral leases may be issued upon such monthly or annualminimum rental payment basis as shall be fixed by the board, which paymentshall be annually applied against such royalty as shall accrue for the samelease year by the terms of such lease, which royalty, as to lands leased foroil or gas shall not be less than five percent (5%) of all oil and gas producedand saved from and not used in operations on the lands under the lease, androyalty of not less than five cents ($.05) per ton on coal produced from thelands under any such lease for coal purposes, such royalty to be paid on minerun of coal. No mineral lease issued under the provisions of this section shallbe assignable or transferable except with written consent of the director,subject to criteria established by the board, and he shall require the lessee'sfull compliance with and observance of all rules and regulations adopted by theboard and for the lessee's compliance with all other terms of the lease. Allmineral leases issued pursuant to this section shall be separate and distinctfrom each lease of the same land for grazing or agricultural purposes, issuedby the board, and rules and regulations adopted by the board as hereinauthorized, shall provide for joint use of such lands for grazing andagricultural or mineral purposes without undue interference by the lesseesunder any such class of leases with lessees under any other such class.
(d) The director, subject to criteria established by the board,on behalf of the state, and its lessee or lessees in any such mineral lease arehereby further authorized to join, in the interest of conservation and greaterultimate recovery of oil and gas, in fair and equitable cooperative or unitplans of development or operation of oil and gas pools, with the United Statesgovernment and its lessees, or permittees, or others, or any of them, and thedirector, subject to criteria established by the board, is hereby authorized tomodify and change any and all terms and conditions of any such oil and gaslease or leases, heretofore or hereafter issued, as mutually agreed by thelessor and lessee in any such lease, as required to conform to the terms of anysuch lease to such cooperative or unit plan and as required to effectuateproper operations thereunder, which changes may include extension of the termof years otherwise applicable to any such lease, for the full period of timeduring which such cooperative or unit plan may remain in effect.
(e) When a cooperative or unit agreement is terminated orceases to be effective as to lands upon which there is no production of oil orgas, the lease covering such lands shall remain in effect for a period of two(2) years from the date such lands ceased to be subject to said agreement, orfor the remaining length of the term of the original lease, whichever shall bethe greater, and so long thereafter as oil or gas is produced from said landsin accordance with the requirements of the original lease.
(f) The terms of any lease issued under this section for landon which actual drilling operations were commenced prior to the end of itsprimary term and are being diligently prosecuted at that time shall be extendedfor one (1) year and so long thereafter as oil or gas is produced in payingquantities.
(g) All natural gas leases executed hereunder shall providethat the state of Wyoming may require the lessee to dedicate all the naturalgas produced on lands owned by the state for the use or benefit of the peopleof the state of Wyoming.
(h) If the state board of land commissioners determines itwould benefit the people of the state to have the natural gas dedicated, theboard may arrange for the sale of the natural gas for the use of the people ofthe state or arrange for the exchange of the natural gas produced withproducers of natural gas produced from lands not owned by the state if theexchange will benefit the people of the state. If the board determines thededication would not be in the public interest; or would cause waste as definedby W.S. 30-5-101; or would unreasonably deny the lessee the opportunity toeconomically market the natural gas, it may waive dedication.
(j) The board shall adopt and promulgate necessary rules andregulations to carry out the provisions of subsections (g), (h) and (j) of thissection.
(k) The board, on behalf of the state, and its lessee orlessees in coal and other mineral leases, may approve cooperative miningdevelopment plans established for the purpose of development of the mineralresources in an efficient and economical manner and in accordance with soundengineering practice. The board may also modify and change any and all termsand conditions of any coal and other mineral lease or leases, heretofore orhereafter issued, as mutually agreed by the lessor and lessee in the lease. Thedirector, subject to criteria established by the board, may conform the termsof the lease to a cooperative mining development plan required to effectuateproper operations, with changes that may include extension of the term of yearsotherwise applicable to the lease, for the full period of time during which thecooperative mining development plan may remain in effect. A cooperativedevelopment plan may consist of one (1) or more private, state or federalleaseholds or mineral interests. All lands in a cooperative mining developmentplan shall be under the effective control of a single operator, capable ofbeing developed and operated as a single operation.
(m) The director, subject to criteria established by the board,may lease any state or state school lands for coal and other mineral purposesfor a primary term of not exceeding ten (10) years. Lessee shall have theexclusive right to renew the lease for successive terms of ten (10) years each,if at the time application for renewal is filed:
(i) Coal or other minerals covered by the lease are actuallybeing produced from the leased lands and the lessee is complying with all leaseterms; or
(ii) The leased lands are committed to a cooperative miningdevelopment plan approved by the board and coal or other minerals are actuallybeing produced from the cooperative mining development plan and the lessee iscomplying with the plan and all lease terms; or
(iii) The lessee is proceeding in good faith to develop theleased lands; or
(iv) If the lessee shows to the satisfaction of the director orthe board that production of coal or other minerals has been delayed by thenecessity of obtaining licenses, permits, or other approvals from governmentalauthorities and that the lessee has used reasonable diligence in an effort toobtain the licenses, permits or other required authorizations.
(n) As used in subsection (m) of this section, good faithdevelopment means the substantial expenditures or firm commitments forexploration, engineering, environmental studies, hydrological studies orresearch and development which is required for development of the lease. Toassist the lessee in planning for the orderly development of the lease orleases, the lessee may submit to the board at any time during the term of thelease or leases a schedule and discussion of proposed expenditures orcommitments for the development of the lease or leases. After reviewing theschedule and discussion, the board shall issue a ruling in writing withinninety (90) days binding upon the state and the lessee, determining whether ornot the proposed expenditures or commitments, when and if actually made bylessee, shall qualify as "substantial expenditures or commitments" soas to constitute "good faith development" within the meaning ofsubsection (m) of this section.
(o) Any mineral lessee or producer shall report all productionincluding total volume, value and disposition of the mineral production underany lease, unit or communitization agreement in a timely manner and in suchform as determined by the board. Any person failing to comply with thissubsection shall be subject to penalties enacted by the board or thecancellation of the lease or agreement under which they are operating.
36-6-102. Submission, custody and confidentiality of subsurface logreports.
(a) Contingent upon the leasing of any state or state schoollands for coal, uranium or other mineral exploration, the board of landcommissioners shall require copies of all electrical, gamma-ray neutron,resistivity or other types of subsurface log reports, and all assay reports forany rock cores or cuttings to be submitted to the office of the state geologistwithin ninety (90) days after completion of drilling and completion ofassociated reports. Reports submitted to the oil and gas conservationcommission are deemed to satisfy the requirements of this subsection.
(b) All subsurface log reports and assay reports will be heldconfidential for a period of three (3) years after initial receipt by the stategeologist. Confidentiality may be extended in one (1) year increments uponreceipt by the state geologist of a written request by certified mail, returnreceipt requested, from the person or legal entity requesting thatconfidentiality be extended. All requests must be received prior to theexpiration of the period of confidentiality. All reports filed under thissection shall become the property of the state to be retained within thepermanent files of the Wyoming geological survey board for the use of theoffice and public after the period of confidentiality has expired.
36-6-103. Existing oil and gas leases ratified.
Theissuance of all oil and gas leases upon any state or school lands heretoforeissued by the board of land commissioners for primary terms up to ten (10)years and as long thereafter as oil or gas may be produced in payingquantities, and the granting of all extensions heretofore granted by the boardof land commissioners of the terms of existing oil and gas leases upon anystate or state school lands for as long after the primary term as oil or gasmay be produced in paying quantities, are hereby ratified, confirmed, andvalidated. Each joinder by the board of land commissioners on behalf of thestate of Wyoming in any cooperative or unit plan of development or operation ofany oil or gas pool, and all modifications and changes in any of the terms orconditions of any oil or gas lease arising from any such joinder, or incidentthereto, and all thereof, are hereby ratified, confirmed, and validated.
36-6-104. Payment for improvements; "improvements" defined.
Ifmineral lands upon which improvements have been made shall be sold or if suchlands shall be leased to other than the owner of the improvements thereon, thensuch purchaser or such new lessee shall pay to the owner thereof the value ofsaid improvements, at an agreed price with the owner thereof; or if suchagreement cannot be reached, then at such price as shall be fixed byappraisement under the authority of the board of land commissioners. The word"improvements" shall be construed to mean surface improvements,machinery and other equipment used and necessary for the operation of the planton such land, and work performed in the development of the property foroperation and mining when such development work is of practical use in futuremineral operations on such land. Wells drilled for oil which do not produce oilin commercial quantities, shafts, tunnels or drifts from which coal or otherminerals have been practically exhausted, shall not be considered asimprovements.
36-6-105. Inspection reports.
Thestate geologist or any state coal mine inspector shall, when requested by theboard of land commissioners, visit and make a report upon any lands held undercoal and mineral leases. Such report shall be made without any fee to theofficer making same.
ARTICLE 2 - COUNTIES, CITIES, TOWNS AND SCHOOL DISTRICTS
36-6-201. Authority to lease or otherwise contract.
Thegoverning body of any county, city, town or school district authorized toacquire and hold real property, may, upon determining that such action will bein the best interests of such county, city, town or school district, lease anylands owned in fee by such county, city, town or school district, for theexploration for and development and production of oil, gas or otherhydrocarbons, and otherwise contract for such exploration, development andproduction, upon such terms as such governing body may determine and as are notinconsistent with the provisions of this act; providing the exploration for,development and production of oil, gas or other hydrocarbons shall in no wayinterfere with the public use of said lands or the purpose for which said landswere acquired.
36-6-202. Power to modify or change leases or contracts.
Anysuch governing body may, by such lease or contract or by other agreement,include, or provide for the inclusion of, the lands of such county, city, townor school district, or any part or portion of such lands, with other lands inany plan or agreement for cooperative or unit development or operation for oil,gas or other hydrocarbons, and modify and change any and all terms of any leaseor contract heretofore entered into or hereafter entered into under theprovisions of this act, including the extension of the term of any such leaseor contract for the full period of time such cooperative or unit plan oragreement may remain in effect, as required to conform the terms of any suchlease or contract to such cooperative or unit plan or agreement.
36-6-203. Rules and regulations; requisites of leases or contracts.
(a) Any such governing body may, in its discretion, make andestablish such rules and regulations governing the issuance of such leases andcontracts as are not inconsistent with the provisions of this act. Any suchlease or contract:
(i) Shall be entered into pursuant to resolution duly adoptedby the governing body;
(ii) May cover parcels of land of such size and shape as thegoverning body may determine;
(iii) May be for a term not exceeding ten (10) years and as longthereafter as oil, gas or other hydrocarbons shall be, or can be, produced incommercial quantities from the lands included in such lease, except as suchterm may be extended pursuant to the provisions of W.S. 36-6-202; and
(iv) Shall reserve to the governing body a royalty of not lessthan one-eighth of all oil, gas or other hydrocarbons produced from said lands.
36-6-204. Existing leases, contracts and agreements validated.
Nothingin this act contained shall operate or be construed as in anywise limiting oraffecting the power or authority of the governing body of any county, city,town, or school district, to have entered into any lease or contract for theexploration for the development and production of oil, gas or otherhydrocarbons, or any agreement for cooperative or unit development or operationfor oil, gas or other hydrocarbons, entered into by such governing body priorto the passage of this act, and all such leases, contracts and agreementspreviously entered into in substantial compliance with the above provision arehereby validated and confirmed.
ARTICLE 3 - CALCULATION OF ROYALTIES ON OIL, NATURAL GAS ANDASSOCIATED NATURAL RESOURCE PRODUCTION
36-6-301. Definitions.
(a) As used in this article:
(i) "Associated natural resource" means anysubstance, element or compound, either gaseous, liquid or solid, associatedwith the production, refining or processing of oil or gas. The term includes,but is not limited to, propane, butanes, ethane, methane, carbon dioxide,sulphur, helium, nitrogen and natural gas liquids;
(ii) "Natural gas" means hydrocarbons ornonhydrocarbons which at atmospheric conditions of temperature and pressure arein a gaseous phase;
(iii) "Oil" means crude petroleum and otherhydrocarbons regardless of gravity which are produced at the wellhead in liquidform, and the liquid hydrocarbons known as distillate or condensate recoveredor extracted from gas, other than gas produced in association with oil andcommonly known as casinghead gas;
(iv) "Processing plant" means a plant to removeliquefiable hydrocarbons from a gas stream or to separate natural gas intophysically or chemically distinct marketable associated natural resources;
(v) "Return on investment" means a percentage rateapplied over a period of years to the equity investment for construction oftransportation facilities or processing plants for oil, natural gas orassociated natural resources. This percentage rate represents the rate alessee or successor in interest supposedly could have received from investmentof equity in some other commercial or financial undertaking. "Return oninvestment" also means a percentage of earnings or profitability ratiowhich a lessee, producer or successor in interest anticipates or desires toreceive on the equity investment in transportation facilities or processingplant;
(vi) "Transportation facilities" means thosefacilities constructed for moving any oil, natural gas or associated naturalresource from the place of production to the closest point of sale or to aprocessing plant.
36-6-302. "Return on investment" deduction not allowed forcalculation of royalty.
(a) For state lease royalty and overriding royalty, other thanroyalty owing to the United States of America, calculations for oil, naturalgas and associated natural resources, neither lessee nor any successor ininterest will be allowed any deduction for any "return on investmentcost."
(b) This article applies to all state leases of oil, naturalgas or associated natural resources.
36-6-101. Terms of leases; extensions; rules and regulations; rent androyalties; assignment of leases; grazing and agricultural leases; cooperationwith United States or its lessees, in cooperative or unit plans.
(a) The board of land commissioners may lease any state orstate school lands for oil and gas for a primary term up to ten (10) years andas long thereafter as oil or gas may be produced in paying quantities, and mayextend the term of existing oil and gas leases in good standing for as long asoil or gas may be produced in paying quantities.
(b) The board is further authorized to make and establish rulesand regulations governing the issuance of oil and gas, coal and other mineralleases and covering the conduct of development and mining operations.
(c) Mineral leases may be issued upon such monthly or annualminimum rental payment basis as shall be fixed by the board, which paymentshall be annually applied against such royalty as shall accrue for the samelease year by the terms of such lease, which royalty, as to lands leased foroil or gas shall not be less than five percent (5%) of all oil and gas producedand saved from and not used in operations on the lands under the lease, androyalty of not less than five cents ($.05) per ton on coal produced from thelands under any such lease for coal purposes, such royalty to be paid on minerun of coal. No mineral lease issued under the provisions of this section shallbe assignable or transferable except with written consent of the director,subject to criteria established by the board, and he shall require the lessee'sfull compliance with and observance of all rules and regulations adopted by theboard and for the lessee's compliance with all other terms of the lease. Allmineral leases issued pursuant to this section shall be separate and distinctfrom each lease of the same land for grazing or agricultural purposes, issuedby the board, and rules and regulations adopted by the board as hereinauthorized, shall provide for joint use of such lands for grazing andagricultural or mineral purposes without undue interference by the lesseesunder any such class of leases with lessees under any other such class.
(d) The director, subject to criteria established by the board,on behalf of the state, and its lessee or lessees in any such mineral lease arehereby further authorized to join, in the interest of conservation and greaterultimate recovery of oil and gas, in fair and equitable cooperative or unitplans of development or operation of oil and gas pools, with the United Statesgovernment and its lessees, or permittees, or others, or any of them, and thedirector, subject to criteria established by the board, is hereby authorized tomodify and change any and all terms and conditions of any such oil and gaslease or leases, heretofore or hereafter issued, as mutually agreed by thelessor and lessee in any such lease, as required to conform to the terms of anysuch lease to such cooperative or unit plan and as required to effectuateproper operations thereunder, which changes may include extension of the termof years otherwise applicable to any such lease, for the full period of timeduring which such cooperative or unit plan may remain in effect.
(e) When a cooperative or unit agreement is terminated orceases to be effective as to lands upon which there is no production of oil orgas, the lease covering such lands shall remain in effect for a period of two(2) years from the date such lands ceased to be subject to said agreement, orfor the remaining length of the term of the original lease, whichever shall bethe greater, and so long thereafter as oil or gas is produced from said landsin accordance with the requirements of the original lease.
(f) The terms of any lease issued under this section for landon which actual drilling operations were commenced prior to the end of itsprimary term and are being diligently prosecuted at that time shall be extendedfor one (1) year and so long thereafter as oil or gas is produced in payingquantities.
(g) All natural gas leases executed hereunder shall providethat the state of Wyoming may require the lessee to dedicate all the naturalgas produced on lands owned by the state for the use or benefit of the peopleof the state of Wyoming.
(h) If the state board of land commissioners determines itwould benefit the people of the state to have the natural gas dedicated, theboard may arrange for the sale of the natural gas for the use of the people ofthe state or arrange for the exchange of the natural gas produced withproducers of natural gas produced from lands not owned by the state if theexchange will benefit the people of the state. If the board determines thededication would not be in the public interest; or would cause waste as definedby W.S. 30-5-101; or would unreasonably deny the lessee the opportunity toeconomically market the natural gas, it may waive dedication.
(j) The board shall adopt and promulgate necessary rules andregulations to carry out the provisions of subsections (g), (h) and (j) of thissection.
(k) The board, on behalf of the state, and its lessee orlessees in coal and other mineral leases, may approve cooperative miningdevelopment plans established for the purpose of development of the mineralresources in an efficient and economical manner and in accordance with soundengineering practice. The board may also modify and change any and all termsand conditions of any coal and other mineral lease or leases, heretofore orhereafter issued, as mutually agreed by the lessor and lessee in the lease. Thedirector, subject to criteria established by the board, may conform the termsof the lease to a cooperative mining development plan required to effectuateproper operations, with changes that may include extension of the term of yearsotherwise applicable to the lease, for the full period of time during which thecooperative mining development plan may remain in effect. A cooperativedevelopment plan may consist of one (1) or more private, state or federalleaseholds or mineral interests. All lands in a cooperative mining developmentplan shall be under the effective control of a single operator, capable ofbeing developed and operated as a single operation.
(m) The director, subject to criteria established by the board,may lease any state or state school lands for coal and other mineral purposesfor a primary term of not exceeding ten (10) years. Lessee shall have theexclusive right to renew the lease for successive terms of ten (10) years each,if at the time application for renewal is filed:
(i) Coal or other minerals covered by the lease are actuallybeing produced from the leased lands and the lessee is complying with all leaseterms; or
(ii) The leased lands are committed to a cooperative miningdevelopment plan approved by the board and coal or other minerals are actuallybeing produced from the cooperative mining development plan and the lessee iscomplying with the plan and all lease terms; or
(iii) The lessee is proceeding in good faith to develop theleased lands; or
(iv) If the lessee shows to the satisfaction of the director orthe board that production of coal or other minerals has been delayed by thenecessity of obtaining licenses, permits, or other approvals from governmentalauthorities and that the lessee has used reasonable diligence in an effort toobtain the licenses, permits or other required authorizations.
(n) As used in subsection (m) of this section, good faithdevelopment means the substantial expenditures or firm commitments forexploration, engineering, environmental studies, hydrological studies orresearch and development which is required for development of the lease. Toassist the lessee in planning for the orderly development of the lease orleases, the lessee may submit to the board at any time during the term of thelease or leases a schedule and discussion of proposed expenditures orcommitments for the development of the lease or leases. After reviewing theschedule and discussion, the board shall issue a ruling in writing withinninety (90) days binding upon the state and the lessee, determining whether ornot the proposed expenditures or commitments, when and if actually made bylessee, shall qualify as "substantial expenditures or commitments" soas to constitute "good faith development" within the meaning ofsubsection (m) of this section.
(o) Any mineral lessee or producer shall report all productionincluding total volume, value and disposition of the mineral production underany lease, unit or communitization agreement in a timely manner and in suchform as determined by the board. Any person failing to comply with thissubsection shall be subject to penalties enacted by the board or thecancellation of the lease or agreement under which they are operating.
36-6-102. Submission, custody and confidentiality of subsurface logreports.
(a) Contingent upon the leasing of any state or state schoollands for coal, uranium or other mineral exploration, the board of landcommissioners shall require copies of all electrical, gamma-ray neutron,resistivity or other types of subsurface log reports, and all assay reports forany rock cores or cuttings to be submitted to the office of the state geologistwithin ninety (90) days after completion of drilling and completion ofassociated reports. Reports submitted to the oil and gas conservationcommission are deemed to satisfy the requirements of this subsection.
(b) All subsurface log reports and assay reports will be heldconfidential for a period of three (3) years after initial receipt by the stategeologist. Confidentiality may be extended in one (1) year increments uponreceipt by the state geologist of a written request by certified mail, returnreceipt requested, from the person or legal entity requesting thatconfidentiality be extended. All requests must be received prior to theexpiration of the period of confidentiality. All reports filed under thissection shall become the property of the state to be retained within thepermanent files of the Wyoming geological survey board for the use of theoffice and public after the period of confidentiality has expired.
36-6-103. Existing oil and gas leases ratified.
Theissuance of all oil and gas leases upon any state or school lands heretoforeissued by the board of land commissioners for primary terms up to ten (10)years and as long thereafter as oil or gas may be produced in payingquantities, and the granting of all extensions heretofore granted by the boardof land commissioners of the terms of existing oil and gas leases upon anystate or state school lands for as long after the primary term as oil or gasmay be produced in paying quantities, are hereby ratified, confirmed, andvalidated. Each joinder by the board of land commissioners on behalf of thestate of Wyoming in any cooperative or unit plan of development or operation ofany oil or gas pool, and all modifications and changes in any of the terms orconditions of any oil or gas lease arising from any such joinder, or incidentthereto, and all thereof, are hereby ratified, confirmed, and validated.
36-6-104. Payment for improvements; "improvements" defined.
Ifmineral lands upon which improvements have been made shall be sold or if suchlands shall be leased to other than the owner of the improvements thereon, thensuch purchaser or such new lessee shall pay to the owner thereof the value ofsaid improvements, at an agreed price with the owner thereof; or if suchagreement cannot be reached, then at such price as shall be fixed byappraisement under the authority of the board of land commissioners. The word"improvements" shall be construed to mean surface improvements,machinery and other equipment used and necessary for the operation of the planton such land, and work performed in the development of the property foroperation and mining when such development work is of practical use in futuremineral operations on such land. Wells drilled for oil which do not produce oilin commercial quantities, shafts, tunnels or drifts from which coal or otherminerals have been practically exhausted, shall not be considered asimprovements.
36-6-105. Inspection reports.
Thestate geologist or any state coal mine inspector shall, when requested by theboard of land commissioners, visit and make a report upon any lands held undercoal and mineral leases. Such report shall be made without any fee to theofficer making same.
ARTICLE 2 - COUNTIES, CITIES, TOWNS AND SCHOOL DISTRICTS
36-6-201. Authority to lease or otherwise contract.
Thegoverning body of any county, city, town or school district authorized toacquire and hold real property, may, upon determining that such action will bein the best interests of such county, city, town or school district, lease anylands owned in fee by such county, city, town or school district, for theexploration for and development and production of oil, gas or otherhydrocarbons, and otherwise contract for such exploration, development andproduction, upon such terms as such governing body may determine and as are notinconsistent with the provisions of this act; providing the exploration for,development and production of oil, gas or other hydrocarbons shall in no wayinterfere with the public use of said lands or the purpose for which said landswere acquired.
36-6-202. Power to modify or change leases or contracts.
Anysuch governing body may, by such lease or contract or by other agreement,include, or provide for the inclusion of, the lands of such county, city, townor school district, or any part or portion of such lands, with other lands inany plan or agreement for cooperative or unit development or operation for oil,gas or other hydrocarbons, and modify and change any and all terms of any leaseor contract heretofore entered into or hereafter entered into under theprovisions of this act, including the extension of the term of any such leaseor contract for the full period of time such cooperative or unit plan oragreement may remain in effect, as required to conform the terms of any suchlease or contract to such cooperative or unit plan or agreement.
36-6-203. Rules and regulations; requisites of leases or contracts.
(a) Any such governing body may, in its discretion, make andestablish such rules and regulations governing the issuance of such leases andcontracts as are not inconsistent with the provisions of this act. Any suchlease or contract:
(i) Shall be entered into pursuant to resolution duly adoptedby the governing body;
(ii) May cover parcels of land of such size and shape as thegoverning body may determine;
(iii) May be for a term not exceeding ten (10) years and as longthereafter as oil, gas or other hydrocarbons shall be, or can be, produced incommercial quantities from the lands included in such lease, except as suchterm may be extended pursuant to the provisions of W.S. 36-6-202; and
(iv) Shall reserve to the governing body a royalty of not lessthan one-eighth of all oil, gas or other hydrocarbons produced from said lands.
36-6-204. Existing leases, contracts and agreements validated.
Nothingin this act contained shall operate or be construed as in anywise limiting oraffecting the power or authority of the governing body of any county, city,town, or school district, to have entered into any lease or contract for theexploration for the development and production of oil, gas or otherhydrocarbons, or any agreement for cooperative or unit development or operationfor oil, gas or other hydrocarbons, entered into by such governing body priorto the passage of this act, and all such leases, contracts and agreementspreviously entered into in substantial compliance with the above provision arehereby validated and confirmed.
ARTICLE 3 - CALCULATION OF ROYALTIES ON OIL, NATURAL GAS ANDASSOCIATED NATURAL RESOURCE PRODUCTION
36-6-301. Definitions.
(a) As used in this article:
(i) "Associated natural resource" means anysubstance, element or compound, either gaseous, liquid or solid, associatedwith the production, refining or processing of oil or gas. The term includes,but is not limited to, propane, butanes, ethane, methane, carbon dioxide,sulphur, helium, nitrogen and natural gas liquids;
(ii) "Natural gas" means hydrocarbons ornonhydrocarbons which at atmospheric conditions of temperature and pressure arein a gaseous phase;
(iii) "Oil" means crude petroleum and otherhydrocarbons regardless of gravity which are produced at the wellhead in liquidform, and the liquid hydrocarbons known as distillate or condensate recoveredor extracted from gas, other than gas produced in association with oil andcommonly known as casinghead gas;
(iv) "Processing plant" means a plant to removeliquefiable hydrocarbons from a gas stream or to separate natural gas intophysically or chemically distinct marketable associated natural resources;
(v) "Return on investment" means a percentage rateapplied over a period of years to the equity investment for construction oftransportation facilities or processing plants for oil, natural gas orassociated natural resources. This percentage rate represents the rate alessee or successor in interest supposedly could have received from investmentof equity in some other commercial or financial undertaking. "Return oninvestment" also means a percentage of earnings or profitability ratiowhich a lessee, producer or successor in interest anticipates or desires toreceive on the equity investment in transportation facilities or processingplant;
(vi) "Transportation facilities" means thosefacilities constructed for moving any oil, natural gas or associated naturalresource from the place of production to the closest point of sale or to aprocessing plant.
36-6-302. "Return on investment" deduction not allowed forcalculation of royalty.
(a) For state lease royalty and overriding royalty, other thanroyalty owing to the United States of America, calculations for oil, naturalgas and associated natural resources, neither lessee nor any successor ininterest will be allowed any deduction for any "return on investmentcost."
(b) This article applies to all state leases of oil, naturalgas or associated natural resources.
