A. Each owner entitled to produce shall at a minimum have the right to produce separately its proportionate production interest in monthly production, subject to balancing restrictions created by statute, rule, agreement or operation of law; provided, however, no provision of the Production Revenue Standards Act shall create a new right for any owner to produce in excess of its proportionate production interest share of the total recoverable reserves from a well. As used herein, an owner is entitled to produce when by right of contract, lease, mineral ownership, Corporation Commission order or operation of law, such owner has acquired or retained a current right to separately contract for, dispose of or sell oil or gas from a well. Nothing in the Production Revenue Standards Act shall prevent any owner having the right to take production in kind, including a royalty interest owner, from so taking its share of production in kind or create a right to take in kind or use production, which right did not previously exist.

B. Except as otherwise provided by statute, rule, agreement or operation of law, proceeds from production, after deduction of royalty proceeds, shall be separately owned by the producing owner and any subsequently created interests attributable to the interests of such owner. A working interest owner shall be responsible for payment and reporting to any subsequently created interest which burdens its working interest.

C. All rights, burdens, duties and undertakings attributable to working interest other than the duty to pay royalty proceeds shall remain with such working interest and shall not be communitized pursuant to the Production Revenue Standards Act.

D. Notwithstanding any other provisions of the Production Revenue Standards Act, any working interest owner that pays or causes to be paid royalty proceeds for gas production in accordance with the Production Revenue Standards Act valued according to the terms of such working interest owner's lease shall be relieved from all liability to royalty interest owners for any further payment of proceeds from such production.

E. Nothing in the Production Revenue Standards Act shall:

1. Prevent any working interest owner entitled to produce gas from receiving the price agreed upon by contract;

2. Eliminate or otherwise affect the rights and remedies available to any operator or working interest owner against any other working interest owner, including but not limited to an operator, that defaults or fails to pay its proportionate share of the well cost; or

3. Set the price, terms or conditions under which a purchaser takes the production or set any restrictions, limitations, floor or ceiling on the price to be paid for such production.

Added by Laws 1992, c. 190, § 9, eff. July 1, 1993.