Okla. Stat. tit. 52, § 52-570.4

and duties - Alternative royalty disbursement procedure.

A. In each month, each royalty interest owner shall share in

all proceeds derived from the sale of gas production from a well to

the extent of such owner's royalty interest in that well without

regard to the identity of the producing owners during that period.

B. Each producing owner shall pay or cause to be paid to the

operator the royalty share of its gas sales proceeds, valued

according to such producing owner's lease terms or Corporation

Commission forced pooling order, from all gas produced from the well

by such owner during any month. The operator shall thereupon pay or

cause to be paid such royalty proceeds to each royalty interest

owner in the well in accordance with the proportionate royalty share

owned by each royalty interest owner. The payment of such proceeds

shall be accompanied by the information set out in Section 12 of

this act.

C. The operator shall act solely in a ministerial capacity when

performing functions on behalf of others pursuant to this act. The

operator shall have discharged its duties to pay royalty proceeds

under this act when it remits to the royalty interest owner such

royalty proceeds that the operator has received from an owner

pursuant to this act. In the absence of a division order signed by

a royalty interest owner, an operator in distributing or causing to

be distributed the royalty proceeds on gas production to that

royalty interest owner shall be entitled to rely on royalty

ownership and remittance information provided by the working

interest owner burdened by such royalty interest. Working interest

owners shall be solely liable for mispayments caused by their errors

in or omissions of royalty ownership and remittance information on

the royalty interests burdening them. When collecting and

disbursing royalty funds and reporting pursuant to Section 12 of

this act, the operator shall be entitled to rely on information

provided to it by or on behalf of another producing owner.

D. As an alternative to the royalty disbursement procedure set

forth in subsection B of this section, a producing owner shall have

the right to pay or cause to be paid the royalty share of its gas

sales from gas produced by such owner during any month directly to

all royalty interest owners according to their proportionate royalty

shares in such well, contingent upon the following:

1. Such producing owner shall be solely liable for all errors

in and omissions of payment that it makes of royalty proceeds;

2. Such producing owner shall make written report to the

operator within thirty (30) days of the date of such payment of all

information relating to such payments, including the information

specified by Section 12 of this act;

Oklahoma Statutes - Title 52. Oil and Gas Page 236

3. Such producing owner shall give to the operator not less

than sixty (60) days' written notice prior to initiating or

terminating this alternate royalty disbursement procedure; provided,

however, any owner terminating this alternate royalty disbursement

procedure may not reinitiate such procedure for twelve (12) months

from the effective date of such termination;

4. Such producing owner shall solely bear all additional costs

incurred by the operator or itself because of its initiation,

utilization or termination of this alternative royalty payment

procedure; and

5. Such producing owner shall provide or cause to be provided

to the royalty interest owners for each month such producing owner's

proportionate production interest, and the information required

under Section 12 of this act.