With legislative deadlines approaching, the OIPA continues to move forward with its bill to protect producers from future purchaser bankruptcies.
Senate Bill 1615, the Oil and Gas Lien Act by Sen. Brian Bingman and Rep. John Trebilcock, will be heard on the floor of the Senate in front of the deadline for bills to be passed out of their respective chambers.
Many phone calls and emails were exchanged between OIPA members and their respective bankers in order to clear up misconceptions in the bill’s language. In the end, the Oklahoma Bankers Association, who had put out an alert about the bill in late February, officially adopted a “do not oppose” position on the bill.
It remains unclear in what form the bill will be considered, but we continue to work to educate our elected friends about the urgent necessity for the bill and also with lenders to producers to show them the benefits of the bills passage.
The bill is in response to the Bankruptcy Court’s decision in the SemCrude bankruptcy case putting Oklahoma producers and royalty owners behind the banks that loaned SemCrude money and a federal court decision that has weakened existing statutory lien rights designed to protect producers.
In summary, the bill does the following:
• It gives those with rights in oil and gas minerals and the production of oil and gas, including banks that loan money to those owners, a first priority statutory lien in all oil and gas produced from Oklahoma wells.
• The lien secures the obligations of a first purchaser to pay the agreed price for that production.
• The lien is automatic, doesn’t require filing, attaches to the minerals in place as well as to severed oil and gas and also covers all proceeds and products of the oil and gas.
• When the first purchaser is paid by a buyer in the ordinary course of business, the security interest drops off of the oil or gas sold and attaches to the proceeds. The same is true with the producer – when the producer is paid by the first purchaser, the lien attaches only to the proceeds in the hands of the producer.
• The bill protects the buyer who buys from a first purchaser in the ordinary course of business and also has certain provisions allowing secured loans in place on the effective date of the act to continue until those loans mature or are modified. | 
