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Transfering and Assigning Oil and Gas Lease Interest

The regulations governing the filing of transfers, which includes record title assignments, operating rights transfers, overriding royalty assignments, mergers, name change and transfers through estates, are found in 43 CFR 3106. Record title, operating rights and overriding royalty interest are defined as follows:

Record Title: Primary ownership of an interest in an oil and gas lease that includes the obligation to pay rent, and the rights to assign and relinquish the lease. Overriding royalty and operating rights are severable from record title interests.

Operating Rights/Working Interest: The interest or contractual obligation created out of the lease (such as a sublease) authorizing the holder of that right to enter the leased lands to conduct drilling and related operations, including production, which may include as consideration a share in revenues therefrom. Operating rights may or may not be transferred through an operating agreement, however, transfer of operating rights on Federal leases must be filed and approved on the official assignment form.

Overriding Royalty: A royalty paid to someone by a record title holder in addition to, or over, the royalty paid to the United States; also, an interest in the lease which provides no control over the operations of the lease, only revenue from lease production.

1. Assignment of Record Title Interest: Three originally-executed copies of Record Title Interest in a Lease for Oil and Gas or Geothermal Resources, Form  3000-3, the current edition, must be filed in the Bureau of Land Management State Office which administers the affected lease. Machine copies of the original signatures are not acceptable. If the official form is reproduced, the copies must be exact two-sided reproductions. Each assignor must sign and date each of the three forms. The assignee is required to originally execute only one Request for Approval on the reverse of the assignment form. The date on the Request for Approval by the assignee must be the same date or after the date of execution by the assignor. A $85 nonrefundable filing fee must accompany each assignment that is filed.

Assignments of record title must be filed within 90 days of execution (signature and dating) of the assignment by the assignor. If the assignments are filed after the 90-day period, you may furnish a statement signed by the assignor and assignee stating that the assignment is still in effect.

Multiple assignors may convey interest on a single Record Title Assignment. Two or more assignors may convey interest to one or more assignees on the same Record Title Assignment.

If operating rights in the lands have never been previously severed from record title interest, a record title assignment will convey operating rights interest as well as record title interest. Therefore, it is not necessary to file both a record title assignment and an operating rights transfer when conveying all the interest in a lease. However, once the lands have been severed, in order to convey operating rights interest, an operating rights transfer must be filed.

When conveying record title interest where there is actual production on the lease, bonding requirements must be fulfilled before the assignment will be approved. bonding can be furnished by one of the following:

a. If there is an operator on the ground, that operator must be bonded. The operator on the ground may furnish his own bond, or may be covered under a lessee or sublessee's bond;

b. If the lessee or sublessee is their own operator, either may agree to provide the bonding to cover 100% of the liabilities on the lease; or

c . If there is more than one lessee, any or all lessees may provide bonding for the lease provided that 100% of the liabilities on the lease are covered.

When a change in operator on the ground occurs, the new operator must furnish a statement of self-certification to the Bakersfield Field Office (for California leases) that it is the responsible party under the terms and conditions of the lease for all operations conducted on the lease. If the assignor is the operator and is assigning all of its interest in the lease, and there is an unplugged well on the lease, the assignee should contact the Bakersfield FO to file the self-certification statement (in letter format-no form exists) and to ascertain what Sundry Notices may be required. This will expedite the approval of the assignment.

Partial Assignments - Partial assignments are created when an assignor conveys 100 percent record title interest in a portion of the lands in the lease. Partial assignments segregate the lease into two separate leases. The segregated portion of the lease creates a new lease and is assigned a new lease number.

2. Transfer of Operating Rights: Three originally-executed copies of Transfer of Operating Rights (Sublease) in a Lease for Oil and Gas or Geothermal Resources, Form  3000-3a, the current edition, must be filed in the Bureau of Land Management State Office which administers the lease. Machine copies of the original signatures are not acceptable. The transferee is required to originally execute only one Request for Approval on the reverse of the transfer document. Each transferor must sign and date each of the three forms. The date on the Request for Approval by the transferee must be the same date or after the date of execution by the transferor. A $85 nonrefundable filing fee must accompany each transfer that is filed.

Transfer of Operating Rights must be filed within 90 days of execution (signature and dating) of the assignment of transfer by the transferor. If the transfers are filed after the 90-day period, you may furnish a statement signed by the transferor and transferee stating that the transfer is still in effect.

Operating Rights transfers must identify the lease formation depths either by zone, formation, or deposit.

It is not necessary to file separate operating rights transfers when conveying interest in several sections of land. One transfer can convey various interest percentages at various depths. For example: Sec 20: S2, OPERATING RIGHTS FROM THE SURFACE TO 900 FEET; Sec 22: SW, OPERATING RIGHTS FROM 800 FEET TO A DEPTH OF 1,000 FEET.

3. Overriding Royalty Assignments: Overriding royalty interests may be filed on either an Assignment of Record Title Interest in a Lease for Oil and Gas or Geothermal Resources Form 3000-3 or on Form 3000-3a Transfer of Operating Rights (Sublease) in a Lease for Oil and Gas or Geothermal Resources. Only one originally executed copy is required to be filed, accompanied by a $10 filing fee for each affected lease. If more than one copy is filed, the remaining copies are returned to the assignee.

If Form 3000-3 or 3000-3a are not used, the transfer document shall include the transferee's executed statement as to his/her qualifications under 43 CFR 3102. These statements are contained on the reverse of the official Forms 3000-3 and 3000-3a.

Overriding royalty assignments are not adjudicated and no formal approval is given. The document is date stamped upon receipt and filed in the casefile to validate the assignee's interest.

4. Mass Transfers: Mass transfers are used when a transferor is conveying interests of any type in a large number of Federal leases to the same entity. We recommend that a mass transfer not be filed unless the conveyance involves 10 leases or more. Filings should be made on the Bureau-approved current Form 3000-3 or Form 3000-3a with an exhibit of all the leases involved attached to each of the three originally-executed forms. A single copy of the assignment and appropriate exhibit for each affected lease must also be submitted to document each lease file. A $85 nonrefundable filing fee for each lease must accompany the mass transfer.

The approval of the originally-executed assignment form, with the exhibit attached, does not indicate that all the assignments on the mass assignment have been approved. Each assignment will be adjudicated individually and worksheets will be forwarded as each assignment is approved.

5. Name Change or Mergers: In order for this office to recognize a name change or merger, the following must be submitted:

a. A list of serial numbers of all leases, offers and pending assignments currently held in the prior name. The list should also include the serial numbers of leases, unit and communitization agreements where the prior company is the approved operator;

b. A copy of the Secretary of State's certificate of name change or merger;

c. A copy of the amendment of the Articles of Incorporation; and

d. A rider to the nationwide, statewide bond, or individual lease bond, if one is being maintained, whereby the surety consents to changing the name on the bond to the servicing name. The rider must be filed in the BLM State Office where the original bond is filed.

Once acceptable evidence has been filed and approved recognizing the name change or merger, the list of oil and gas lease files are noted. A $205 non-refundable filing fee is required.

If one company buys out the interests of another company, and it is not a merger or name change, record title assignments and/or transfer of operating rights must be filed in order to convey the interest from the assignor to the new assignee.

6. Heirs/Devisees of an Estate: To recognize the transfer of interests to heirs/devisees of an estate, the following evidence must be submitted:

a. If probate of the estate has been completed, the following must be submitted:

(1) A certified copy, or a copy of a certified copy of the will or decree of distribution; and

(2) A qualification statement as to citizenship and acreage holdings in federal oil and gas leases signed by each heir.

b. If probate of the estate has not been completed, the following must be submitted:

(1) A qualification statement as to citizenship and acreage holdings in federal oil and gas leases signed by each heir;

(2) Evidence of the authority of the executor or administrator to act on behalf of the estate; and

(3) Evidence that the heirs or devisees are the only heirs or devisees of the deceased.

c. Where there is no will and probate proceedings are not required, the following must be submitted:

(1) A statement signed by the heirs that they are the only heirs of the deceased; and

(2) A qualification statement as to citizenship and acreage.

A $205 non-refundable filing fee is required.