TITLE DISPUTE AND ESCROW ACCOUNT PROCEDURE
Lessees are required to promptly notify the Office of Mineral Resources (OMR) of a bona fide dispute because of an adverse claim, by an individual or entity not a party to the lease agreement, regarding the ownership or title to all or a portion of any premises under lease by the State of Louisiana. Such notice, in writing, shall be to:
Petroleum Lands Section
Office of Mineral Resources
Post Office Box 2827
Baton Rouge, Louisiana 70821-2827
To view Resolution #18-06-007 from the June 13, 2018 State Mineral and Energy Board ("Board") Meeting and Lease Sale regarding title disputes and escrow account procedures, click here .
This written notice shall:
- •Include an explanation of the dispute in reasonable detail
- •Identify the adverse claimant(s), including contact information
- •Identify the basis for the claim
- •Identify the portion of state leases, operating agreements and/or unleased acreage that are the subject of the dispute
- •Provide a survey plat identifying the disputed acreage (if available)
During the pendency of any such ownership/title dispute, Lessees are required to continue making royalty payments to OMR. As an alternative to immediately invoking a concursus proceeding, Lessees may request authorization from the Board to temporarily deposit royalty payments into an escrow account(s). Such authorization will be for a designated duration of time in order to give the Disputing Parties' time to evaluate the adverse claim and attempt to negotiate an amicable resolution.
Requests for escrow authorization must be in writing and timely submitted to the Petroleum Lands Section no later than ten calendar days prior to the scheduled monthly Board meeting. Such requests will be reviewed by OMR staff and placed on the Board's Legal and Title Committee agenda for consideration.
The suspension of direct payment of royalties to the Office of Mineral Resources is contingent on continued compliance with the requirements set forth in the Board's Resolution stated herein.
A Lessee may, but is not required to be present for the Board's consideration of such a request. The Lessee will be notified, in writing, of the Board's decision. If the request is denied, the Lessee is required to continue making royalty payments directly to OMR or commence a concursus. If the request is granted:
1) Authorization to escrow royalties becomes effective immediately upon adoption unless otherwise stated; and
2) Authorization to escrow royalties will expire as set forth by the Board. The authorization to escrow may be extended by the Board upon a timely request by the Lessee for an extension; and
3) Within thirty (30) calendar days of adoption of this resolution, Lessee shall establish an independent escrow account(s), and the Lessee, the State and any agreeable Disputing Party shall enter into an Escrow Agreement upon the terms and conditions as set forth by this Resolution. The Lessee may desire to establish the independent escrow account(s) via and escrow agent: and
The escrow account(s) shall be a segregated interest-bearing account(s) establish at a FDIC insured financial institution having a presence in the State of Louisiana. A separate escrow account shall be establish for each tract of the Disputed Property were the ownership of a tract differs amongst the Disputing Parties; and
Throughout the authorized escrow period, Lessee shall timely deposit into the escrow account(s), in accordance with the royalty payment terms of the State Lease, the properly calculated reported royalty payments attributable to the Disputed Property; and
Upon request by the State, the Lessee shall provide satisfactory documentation such as, but not limited to, deposited checks, disbursements and/or monthly bank statements pertaining to the escrow account(s), to the Office of Mineral Resources; and
4) Throughout the authorized escrow period, Lessee shall continue to timely provide fully completed SR-9 Reports (and any other requested documents) to the Office of Mineral Resources; (see the SR-9 form in Excel format here ); and
5) If the ownership/title dispute is amicably resolved prior to expiration of the authorized escrow period, the royalty payments on deposit in the escrow accounts(s) and interest thereon accumulating, shall be timely distributed to the State or the Disputing Parties in accordance with the terms and conditions set forth in a final executed Settlement Agreement; and
6) If the ownership/title dispute is not amicably resolved prior to expiration of the authorized escrow period, and any extension thereof authorized by the Board, Lessee shall, within thirty (30) calendar days of expiration, be liable to resume direct payments of royalties or invoke a concursus proceeding. Upon the filing of a concursus proceeding, the royalty payments deposited into the escrow account, including interest, shall be deposited into the Registry of the Court; and
7) Proof of transfer of such funds into the Registry of the Court shall be timely provided to OMR;
8) There shall be no transfer nor release of any funds, including interest, on deposit in the escrow account(s) authorized by this Resolution, without the knowledge and written authorization by the State and the Disputing Parties who are part to the Escrow Agreement; and
9) All charges and expenses in connection with the creation and maintenance of the escrow account(s) authorized hereby are to be borne by Lessee.
10)The Lessee shall acknowledge and agree that the disputed royalty payments deposited into the escrow account(s), in addition to any accumulated interest thereon, are not the property of the Lessee, but are the property of the State or the Disputing Parties and shall not be considered as the property of the Lessee’s estate if the Lessee files for bankruptcy. This acknowledgement shall be contained in the terms of the Escrow Agreement.
The Board may within its sole discretion terminate the Escrow Agreement by providing thirty (30) days’ notice to the Lessee.
The Board reserves the right to audit the royalty payments deposited into the escrow account and further reserves all audit rights authorized by the State Lease.
Any questions regarding the above should be directed to Emile Fontenot, 225-342-1080, firstname.lastname@example.org.