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HB 1371

Oil and gas; interest; remittance; escrow account; relief of liability; effective date.

2026 Regular Session Introduced by Grant Green and 1 co-sponsor

HB 1371 requires timely, separate handling of production proceeds to entitled owners with defined payment deadlines and interest for late payments.

Approved by Governor 05/06/2026
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WeVote Research Nonpartisan
Bill Summary · HB 1371

Summary: HB 1371 (Oklahoma, 2026 Session)

Main purpose and intent

HB 1371 amends the Production Revenue Standards Act to address how oil and gas production proceeds are paid, held, and—crucially—whether and when such proceeds earn interest. The bill establishes rules for timing of payments to owners, handling of unmarketable title, methods of payment, and liability for interest on late payments. It also clarifies relief from liability for certain payors and preserves existing contractual balancing arrangements.

Key provisions and changes

  • Proceeds as separate funds (Section 570.10 A)
    Proceeds from production are to be treated as separate from other funds and held for the benefit of the owners legally entitled thereto. This reinforces a fiduciary-like duty to remit to the correct owners.

  • Payment timing (Section 570.10 B)

    • General rule: Proceeds from oil or gas production must be paid to the entitled owners:
    • No later than six months after the date of first sale, and
    • In subsequent periods, no later than the last day of the second succeeding month after the production month ends.
    • Gas royalty proceeds (Section 570.10 B, para. 2): When remitted to the operator under Section 570.4, royalty proceeds must be paid to entitled owners:
    • No later than six months after first sale, and
    • No later than the last day of the third succeeding month after the production month ends.
    • If the operator receives the proceeds in its producing-owner capacity, it may pay royalty interests at the same time as other owners, but still no later than the third succeeding month after month-end.
    • Annual or monthly accumulation options (Section 570.10 B, para. 3):
    • Proceeds totaling at least $10 but less than $100 may be paid annually after a 12-month accumulation period.
    • Proceeds totaling less than $100 but more than $25 may be remitted monthly upon request; amounts under $10 may be remitted annually upon request.
    • Before accumulating more than $25, notice must be provided to the entitled person (and heirs/assignees) about the option to receive monthly payments, with directions to request monthly payments.
    • Title-related delays (Section 570.10 B, para. 4): Delays caused by unmarketable title must not affect payments to those with marketable title.

  • Liability and relief from liability (Section 570.10 C-E)

    • Payors (first purchaser, working interest owner, operator) who pay proceeds to the entitled recipients are discharged from further liability for those paid proceeds.
    • If proceeds are paid incorrectly due to another party’s error, the responsible party bears liability for the incorrect payments, plus related costs or damages.
    • Interest on late payments (Section 570.10 D):
    • Generally, overdue proceeds accrue interest at 12% per year, compounded annually, from the end of the month production was sold until paid.
    • If the delay is due to unmarketable title, interest accrues at:
      • 6% per year (compounded) for periods before November 1, 2018, and
      • The prime interest rate (WSJ) thereafter, until title becomes marketable or an acceptable death-and-heirship affidavit is provided.
    • If title remains unmarketable for 120 days after the due date, affected owners may interplead the proceeds and interest into court, relieving the holder of further liability.
    • If payment is not paid because it is undeliverable or never cashed, those proceeds do not earn interest.
    • Apportionment of interest when multiple parties fail to remit: Interest is shared in proportion to the time each party held the proceeds.
    • For gas royalty proceeds remitted under Section 570.4, certain early remittance scenarios allow avoiding interest liability:
    • If remitted within the first month following the sale month, or if the producing owner or operator ensures timely distribution in the specified manner, those parties are not liable for interest. If multiple parties fail, liability is shared in proportion to the time the proceeds were held.

  • Gas balancing and existing contractual rights (Section 570.10 F)
    The bill does not impair or amend existing gas balancing agreements or other written agreements that expressly provide for gas proceeds; those agreements’ payment timing remains governed by their terms or, if applicable, by the act, with interest accrual aligned as stated.

  • Payment methods (Section 570.10 G)
    Payments may be made by electronic means (e.g., EFT, ACH, direct deposit, wire) upon mutual written consent of payor and payee.

Affected parties

  • Oil and gas producers, first purchasers, royalty owners, working interest owners, and operators who handle proceeds from the sale of oil and gas production.
  • Recipients entitled to proceeds, including royalty and other interest owners, as defined in Section 570.2.
  • Titleholders and heirs in cases involving unmarketable title or death-and-heirship affidavits.
  • Courts in cases where proceeds with unmarketable title are interpleaded.

Procedural and timeline aspects

  • Effective date: November 1, 2025.
  • The bill provides specific timing for when proceeds must be paid, with clear deadlines for general oil/gas proceeds and for gas royalty proceeds.
  • Optional accumulation and monthly payment choices introduce a potential cash-flow planning consideration for payees with small, infrequent proceeds.
  • Provisions for interest rates and handling of unmarketable title include timelines (e.g., 120-day uncured title issues) and interpleader procedures.

Overall impact

HB 1371 tightens and clarifies the timing and handling of production proceeds, clarifies liability for late payments, and provides structured options for small or infrequent proceeds. It aims to protect owners’ entitled payments, reduce ambiguity in payment timing, and establish clear consequences (including interest) for late remittance, while preserving existing contractual gas balancing arrangements.

Compiled from official sources — confirm details with the bill’s official record.

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