Oil and Gas Proceeds Payments

NMSA 1978 ch. 70, art. 10

in effect

NMSA 1978, § 70-10-1 Short title

70-10-1. Short title This act [70-10-1 to 70-10-3, 70-10-4, 70-10-5 NMSA 1978] may be cited as the "Oil and Gas Proceeds Payment Act". Laws 1985, ch. 55, § 1.

NMSA 1978, § 70-10-2 Definitions

70-10-2. Definitions As used in the Oil and Gas Proceeds Payment Act: A. "oil and gas" means crude oil, natural gas, casinghead gas, condensate or any other related hydrocarbons; B. "oil and gas proceeds" means all payments derived from oil and gas production from any well located in New Mexico, whether royalty interest, overriding royalty interest, production payment interest or working interest, expressed as a right to a specified interest in the cash proceeds received from the sale of oil and gas produced thereunder or the cash value thereof, subject to all taxes withheld therefrom pursuant to law, but excluding "net profits interests", and other types of interest the extent of which cannot be determined with reference to a specified share of such proceeds; and C. "payor" means the party who undertakes to distribute oil and gas proceeds to the parties entitled thereto, including, but not limited to, the first purchaser of such production or as operator of the well from which such production was obtained or as lessee under the lease on which royalty is due. Laws 1985, ch. 55, § 2; 1991, ch. 235, § 1.

NMSA 1978, § 70-10-3 Payment of oil and gas proceeds; time for payment

70-10-3. Payment of oil and gas proceeds; time for payment The oil and gas proceeds derived from the sale of production from any well producing oil, gas or related hydrocarbons in New Mexico shall be paid to all persons legally entitled to such payments, commencing not later than six months after the first day of the month following the date of first sale and thereafter not later than forty-five days after the end of the calendar month within which payment is received by payor for production unless other periods or arrangements are provided for in a valid contract with the person entitled to such proceeds. Payment shall be made directly to the person or persons entitled thereto by the payor and payment shall be deemed to have been made upon deposit in the United States mail. Laws 1985, ch. 55, § 3.

NMSA 1978, § 70-10-3.1 Duty to locate

70-10-3.1. Duty to locate A. The operator or lessee arranging for the sale of oil and gas shall furnish the payor with the name, the address and the percentage of interest of each person to whom payment is to be made, as well as proof of marketable title to all of the oil and gas to be sold. B. The payor shall make a diligent effort to furnish each interest owner with a reasonable division or transfer order that will set forth the proper interest to which the interest owner is entitled, as well as the mailing address to which payment may be directed. C. If the purchaser or payor is unable to locate any person listed by the operator or lessee then the purchaser or payor shall notify the operator or lessee that he has been unable to locate or obtain the address of the person entitled to payment. 1978 Comp., § 70-10-3.1, enacted by Laws 1991, ch. 235, § 2.

NMSA 1978, § 70-10-4 Interest on late payments

70-10-4. Interest on late payments A. Any delay in determining any person legally entitled to an interest in the proceeds from production shall not affect payments to all other persons entitled to payments. In instances where payments cannot be made within the time period provided in Section 70-10-3 NMSA 1978, the payor shall create a suspense account on his books for such interest or may interplead the suspended funds into court. B. The person entitled to payment from the suspended funds shall be entitled to interest on the suspended funds from the date payment is due under Section 70-10-3 NMSA 1978. The interest awarded shall be the discount rate charged by the federal reserve bank of Dallas to member banks plus one and one-half percent on the date payment is due. Payment of principal and interest on the suspended funds shall be made to all persons legally entitled to the funds within thirty days from the date that the persons are determined to be entitled to the suspended funds by a final legal determination. 1978 Comp., § 70-10-4, enacted by Laws 1991, ch. 235, § 3.

NMSA 1978, § 70-10-5 Application; penalty

70-10-5. Application; penalty If a payor fails to make payment to the person entitled to payment within the period provided in Section 70-10-3 NMSA 1978 and after the payor has been furnished with the information required by Section 70-10-3.1 NMSA 1978, the payor shall pay the person the unpaid amount of the payment and in lieu of the interest provided in Section 70-10-4 NMSA 1978 shall pay interest at the rate of eighteen percent per year on the unpaid balance due, unless payment is excused by the happening of one or more of the following: A. the payor fails to make payment in good-faith reliance upon a title opinion by a licensed New Mexico attorney making objection to the lack of good and marketable title of record in the party claiming entitlement to payment and furnishes a copy thereof to such party for curative action required thereby; B. the payor receives information that in his good-faith judgment brings into question the entitlement of the person claiming the right to the payment to receive the payment or that has rendered the marketable title of record unmarketable or that may expose the payor to the risk of multiple liability or liability to third parties if the payment is made; C. the total amount of oil and gas proceeds in the possession of the payor owed to the owner of the oil and gas proceeds making claim to payment is less than one hundred dollars ($100) at the end of any month; or D. the party entitled to payment has failed or refused to execute a reasonable division or transfer order acknowledging the proper interest to which he claims to be entitled and setting forth a mailing address to which payment may be directed. 1978 Comp., § 70-10-5, enacted by Laws 1991, ch. 235, § 4.

NMSA 1978, § 70-10-6 Attorneys' fees

70-10-6. Attorneys' fees The prevailing party in any proceedings brought pursuant to the Oil and Gas Proceeds Payment Act shall be entitled to recover all court costs and reasonable attorneys' fees. 1978 Comp., § 70-10-6, enacted by Laws 1991, ch. 235, § 5.

Source: New Mexico Compilation Commission (nmonesource.com)URL: https://nmonesource.com/nmos/nmsa-unanno/en/item/18573/index.doFetched: 10/20/2026