060-18 Wyo. Code R. §§ 18-7 - [Effective until 10/24/2024] Royalties

(a) Royalties for oil and gas and other kindred hydrocarbons, natural gasoline, sulfur, and non-hydrocarbon gases and any by-products recovered from such gases shall be based on the terms of the particular lease agreement, subject to all state royalty statutes and rules, and shall be based on the total consideration received for state production. The following royalty rates shall apply, unless a different rate is specifically authorized by the Board:

(i) Sixteen and two-thirds percent (16 2/3%), except that in cases where competitive bidding results in no offer to lease, a tract may be re-offered at the discretion of the Director at a subsequent competitive sale at a twelve and one-half percent (121/2%) royalty rate;

(ii) Further, from a list established by the Director containing leases unleased after offerings at both sixteen and two-thirds percent (16 2/3%) and twelve and one-half percent (121/2%) royalty rates, and located further than one mile from existing production, tracts may be leased non-competitively at a royalty of twelve and one-half percent (121/2%) by applications personally delivered to the Office under the procedures described in Section 5 of this chapter;

(iii) At the Board's discretion, when deemed favorable in stimulating exploration on non-producing, primary term oil and gas leases, a specified "drilling window" of no greater than two (2) years may be requested and set for specific leases, allowing a lease royalty rate of ten percent (10%) where production in paying quantities is established during a "window" from a wildcat well as defined by the Rules of the Wyoming Oil and Gas Conservation Commission. Announcement of a "drilling window" will be made no less than thirty (30) days prior to commencement. Leases establishing paying quantity production within a "drilling window" shall receive the royalty rate reduction to ten percent (10%) for so long as paying quantity production exists for any well on the lease thereafter, except that in the event the producer receives an average price equal to or above twenty dollars ($20) per barrel of oil from a well classified as an oil well or one dollar and fifty cents ($1.50) per mmbtu of gas from a well classified as a gas well for six (6) consecutive months from lease production, the ten percent (10%) royalty rate shall cease, and the original lease royalty rate shall be effective for the remaining term of the lease;

(iv) After an oil and gas lease becomes an operating lease, the Board may reduce the royalty payable to the state, as to all or any of the lands or formations covered by the lease, if it determines that such a reduction is necessary to allow the lessee to undertake additional operations or to continue to operate with a reasonable expectation that the operations will be profitable. Royalty rate reduction to the statutory minimum of five percent (5%) may be granted for a limited time, specific to new well production, to allow for the recovery of drilling costs for deep zone exploration completions in excess of twelve thousand feet (12,000'). Royalty rate reductions may also be granted when lease basis income statements reflect that reasonable actual operations costs, when combined with the royalty rate, create a loss situation under arms-length sales. Such a reduction in the royalty payable to the state shall in all cases be conditioned upon the cancellation of all cost-free interests in excess of five percent (5%) and the reduction of all other cost-free interests in the same proportion as the state's royalty is reduced. The Board may also impose other conditions to the reduction in royalty.

Notes

060-18 Wyo. Code R. §§ 18-7

Amended, Eff. 6/26/2024, exp. 10/24/2024 (Emergency).