Texas House Bill HB 5106

Texas 2025 - 89th Regular

• Filed: 3/13/25

Caption

Relating to the information a payor of the proceeds of production from an oil and gas well is required to provide a payee.

Summary

HB 5106 would add new requirements in the Natural Resources Code governing communications between a payor of oil and gas production proceeds and a payee. The bill applies when a payee is asked to sign a ratification of a lease, pooling agreement, or unit designation, or to sign a division order. If the payee makes a written request, the payor must provide a copy of the document to be ratified, or the underlying lease for a division order, within 14 days. The bill also requires payors to include a notice in their request explaining the payee’s rights under the new law. If the payor does not timely respond to the written request, the payee is no longer obligated to sign the ratification or division order, and a payee who is not obligated to sign a division order under this provision is still entitled to payment despite the usual division-order-related payment rule in Section 91.402(c)(1). The bill would take effect September 1, 2025.

Impact

HB 5106 would amend Chapter 91 of the Texas Natural Resources Code by creating Sections 91.409 and 91.410. It would impose a disclosure and notice obligation on oil and gas payors, strengthen a payee’s ability to obtain the underlying lease or related document before signing, and create a statutory consequence for noncompliance by releasing the payee from the obligation to sign. The bill would also affect payment rights by preserving entitlement to proceeds when a division order is not required due to the payor’s failure to respond.

Sentiment

The available record suggests the bill was generally procedural and consumer-protective in nature, aimed at improving transparency for mineral owners and other payees in oil and gas transactions. There is no recorded vote or committee transcript showing opposition or support, and the bill was left pending in the House Energy Resources Committee. Based on the text alone, the measure appears designed to clarify rights and reduce information asymmetry rather than to make broader policy changes.

Contention

The main point of potential contention is the burden the bill places on payors, who would have a short 14-day deadline to provide documents and would face a loss of leverage if they fail to respond. Payees and mineral interest owners would likely favor the bill because it gives them access to the documents they are being asked to ratify and protects their payment rights. Oil and gas operators and other payors could view the bill as adding administrative requirements and limiting their ability to secure ratifications or division orders quickly.