522.0858 - Expenses of unit: Lien for amount assessed; persons primarily responsible for payment; payment by persons not responsible; payment to royalty owners free of lien and expenses.
522.0858 Expenses of unit: Lien for amount assessed; persons primarily responsible for payment; payment by persons not responsible; payment to royalty owners free of lien and expenses.
1. Subject to such reasonable limitations as may be set out in the plan of unitization, the unit has a first and prior lien upon the leasehold estate and all other oil and gas rights (exclusive of a one-eighth landowners’ royalty interest) in and to each separately owned tract, the interest of the owners thereof in and to the unit production and all equipment in the possession of the unit, to secure the payment of the amount of the unit expense charged to and assessed against the separately owned tract.
2. The interest of the lessee or other persons who by lease, contract or otherwise are obligated or responsible for the cost and expense of developing and operating a separately owned tract for oil and gas in the absence of unitization, is primarily responsible for and charged with any assessment for unit expense made against the tract and resort may be had to overriding royalties, oil and gas payments, royalty interests in excess of one-eighth of the production, or other interests which otherwise are not chargeable with that cost, only if the owner of interest primarily responsible fails to pay the assessment of the production to the credit thereof, or production is insufficient for that purpose.
3. If the owner of any royalty interest, overriding royalty, oil or gas payment, or any other interest which under the plan of unitization is not primarily responsible therefor pays in whole or in part the amount of an assessment for unit expense for the purpose of protecting that interest, or the amount of the assessment in whole or in part is deducted from the unit production to the credit of that interest, the owner thereof is to the extent of the payment or deduction subrogated to all the rights of the unit with respect to the interest or interests primarily responsible for the assessment.
4. A one-eighth part of the unit production allocated to each separately owned tract must in all events be regarded as royalty to be distributed to and among, or the proceeds thereof paid to, the royalty owners free and clear of all unit expense and free of any lien therefor.
(Added to NRS by 1983, 2075)