36.25.212    ASSIGNMENTS AND TRANSFERS

(1) The assignment of any lease, either in whole or as to subdivision of land embracing not less than 40 acres covered thereby, made to an assignee qualified as provided under the law and these regulations is permitted. Such assignment is not, however, binding upon the state until filed with the department, accompanied by the required fees, together with proof of qualifications of the assignee as a lessee, and until the assignment is approved by the department. For the purposes of this rule, any lot, according to the governmental survey, shall be deemed to be a legal subdivision of land embracing not less than 40 acres. The approval of any assignment so filed and supported may not be withheld in any case where the rights or interests of the state in the premises assigned will not, in the judgment of the department, be prejudiced thereby. Until such an assignment is approved, the lessee of record shall continue fully liable and responsible for all of the requirements and obligations of the lease. In the case of a partial assignment, i.e., assignment of a full interest in only a portion of the leased premises, a new lease is issued for the assigned acreage, with the same expiration date as the original lease. A new ledger sheet is written and the original lease is adjusted accordingly. The original lessee and the assignee assume full liability for their respective leases.

(2) The assignment of any oil and gas lease, either in whole or in part, to more than one assignee will be permitted if the proposed assignment is otherwise in compliance with the foregoing requirements; however, any such assignment will not be approved until one of the assignees is designated to act as agent for the purpose of receiving any and all notices from the department given in connection with the lease and meeting all requirements and obligations under the lease.

(3) Assignment of undivided, fractional interests in any lease, either as to the whole of the leased premises, or as to any portion thereof, is arranged by having the lessee assign title to the acreage in question to himself and the assignee. The assignment may show the respective shares of interest but the transaction is approved as a transfer of title only and without recognition of the respective interests.

(4) All other assignments of oil and gas leases or interests therein are subject to the approval by the department, and are binding upon the state in the discretion of the department.

(5) Assignments involving overriding royalties or containing certain reservations by the assignee are approved as transfers of title only and without recognition of such overriding royalties or special terms and conditions.

(6) An assignment or transfer on the form currently approved by the board will be acceptable. Evidence of transfers by operation of law should be in the form of a certified copy of the appropriate court order or decree or similar document, such as letters of administration to executor or administrator, decree of distribution, executor's deed or sheriff's deed.

(7) Any transfer, by operation of law, to an unqualified lessee will be recognized by the department for a period of time in no event longer than one year, and only for the purpose of the further transfer of the interest to a qualified lessee.

(8) The department shall notify the parties to any assignment or other transfer submitted for approval of the approval or non-approval thereof.

(9) As to development and production, the lease is regarded as indivisible so that drilling or securing production on any part of the severally assigned tract will inure to the benefit of all segregated parts of the original lease.

History: 77-3-402, MCA; IMP, 77-3-438, MCA; NEW, Eff. 12/5/75; TRANS, 1996 MAR p. 2384.