30 CFR 1206.52 - How do I calculate royalty value for oil that I or my affiliate sell(s) or exchange(s) under an arm's-length contract?

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§ 1206.52 How do I calculate royalty value for oil that I or my affiliate sell(s) or exchange(s) under an arm's-length contract?
(a) The value of oil under this section is the gross proceeds accruing to the seller under the arm's-length contract, less applicable allowances determined under §§ 1206.56 and 1206.57. If the arm's-length sales contract does not reflect the total consideration actually transferred either directly or indirectly from the buyer to the seller, you must value the oil sold as the total consideration accruing to the seller. Use this section to value oil that:
(1) You sell under an arm's-length sales contract; or
(2) You sell or transfer to your affiliate or another person under a non-arm's-length contract and that affiliate or person, or another affiliate of either of them, then sells the oil under an arm's-length contract.
(b) If you have multiple arm's-length contracts to sell oil produced from a lease that is valued under paragraph (a) of this section, the value of the oil is the volume-weighted average of the total consideration established under this section for all contracts for the sale of oil produced from that lease.
(c) If ONRR determines that the value under paragraph (a) of this section does not reflect the reasonable value of the production due to either:
(1) Misconduct by or between the parties to the arm's-length contract; or
(2) Breach of your duty to market the oil for the mutual benefit of yourself and the lessor, ONRR will establish a value based on other relevant matters.
(i) The ONRR will not use this provision to simply substitute its judgment of the market value of the oil for the proceeds received by the seller under an arm's-length sales contract.
(ii) The fact that the price received by the seller under an arm's-length contract is less than other measures of market price is insufficient to establish breach of the duty to market unless ONRR finds additional evidence that the seller acted unreasonably or in bad faith in the sale of oil produced from the lease.
(d) You must base value on the highest price that the seller can receive through legally enforceable claims under the oil sales contract. If the seller fails to take proper or timely action to receive prices or benefits to which it is entitled, you must base value on that obtainable price or benefit.
(1) In some cases the seller may apply timely for a price increase or benefit allowed under the oil sales contract, but the purchaser refuses the seller's request. If this occurs, and the seller takes reasonable documented measures to force purchaser compliance, you will owe no additional royalties unless or until the seller receives monies or consideration resulting from the price increase or additional benefits. This paragraph (d)(1) does not permit you to avoid your royalty payment obligation if a purchaser fails to pay, pays only in part, or pays late.
(2) Any contract revisions or amendments that reduce prices or benefits to which the seller is entitled must be in writing and signed by all parties to the arm's-length contract.
(e) If you or your affiliate enter(s) into an arm's-length exchange agreement, or multiple sequential arm's-length exchange agreements, then you must value your oil under this paragraph.
(1) If you or your affiliate exchange(s) oil at arm's length for WTI or equivalent oil at Cushing, Oklahoma, you must value the oil using the NYMEX price, adjusted for applicable location and quality differentials under paragraph (e)(3) of this section and any transportation costs under paragraph (e)(4) of this section and §§ 1206.56 and 1206.57.
(2) If you do not exchange oil for WTI or equivalent oil at Cushing, but exchange it at arm's length for oil at another location and following the arm's-length exchange(s) you or your affiliate sell(s) the oil received in the exchange(s) under an arm's-length contract, then you must use the gross proceeds under your or your affiliate's arm's-length sales contract after the exchange(s) occur(s), adjusted for applicable location and quality differentials under paragraph (e)(3) of this section and any transportation costs under paragraph (e)(4) of this section and §§ 1206.56 and 1206.57.
(3) You must adjust your gross proceeds for any location or quality differential, or other adjustments, you received or paid under the arm's-length exchange agreement(s). If ONRR determines that any exchange agreement does not reflect reasonable location or quality differentials, ONRR may adjust the differentials you used based on relevant information. You may not otherwise use the price or differential specified in an arm's-length exchange agreement to value your production.
(4) If you value oil under this paragraph, ONRR will allow a deduction, under §§ 1206.56 and 1206.57, for the reasonable, actual costs to transport the oil:
(i) From the lease to a point where oil is given in exchange; and
(ii) If oil is not exchanged to Cushing, Oklahoma, from the point where oil is received in exchange to the point where the oil received in exchange is sold.
(5) If you or your affiliate exchange(s) your oil at arm's length, and neither paragraph (e)(1) nor (e)(2) of this section applies, ONRR will establish a value for the oil based on relevant matters. After ONRR establishes the value, you must report and pay royalties and any late payment interest owed based on that value.
(f) You may not deduct any costs of gathering as part of a transportation deduction or allowance.
(g) You must also comply with § 1206.54.
[72 FR 71241, Dec. 17, 2007]

Title 30 published on 2014-07-01.

The following are only the Rules published in the Federal Register after the published date of Title 30.

For a complete list of all Rules, Proposed Rules, and Notices view the Rulemaking tab.

  • 2015-05-01; vol. 80 # 84 - Friday, May 1, 2015
    1. 80 FR 24794 - Indian Oil Valuation Amendments
      GPO FDSys XML | Text
      DEPARTMENT OF THE INTERIOR, Office of Natural Resources Revenue
      Final rule.
      Effective date: July 1, 2015.
      30 CFR Parts 1206 and 1210

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

This list is taken from the Parallel Table of Authorities and Rules provided by GPO [Government Printing Office].

It is not guaranteed to be accurate or up-to-date, though we do refresh the database weekly. More limitations on accuracy are described at the GPO site.

United States Code
U.S. Code: Title 25 - INDIANS

§ 396 - Leases of allotted lands for mining purposes

§ 396a - Leases of unallotted lands for mining purposes; duration of leases

§ 396b - Public auction of oil and gas leases; requirements

§ 396c - Lessees of restricted lands to furnish bonds for performance

§ 396d - Rules and regulations governing operations; limitations on oil or gas leases

§ 396e - Officials authorized to approve leases

§ 396f - Lands excepted from leasing provisions

§ 396g - Subsurface storage of oil or gas

§ 397 - Leases of lands for grazing or mining

§ 398 - Leases of unallotted lands for oil and gas mining purposes

§ 398a - Leases of unallotted lands for oil and gas mining purposes within Executive order Indian reservations

§ 398b - Proceeds from rentals, royalties, and bonuses; disposition

§ 398c - Taxes

§ 398d - Changes in boundaries of Executive order reservations

§ 398e - Applications for permits to prospect for oil and gas filed under other statutes; disposition

§ 399 - Leases of unallotted mineral lands withdrawn from entry under mining laws

§ 400 - Leases for mining purposes of reserved and unallotted lands in Fort Peck and Blackfeet Indian Reservations

§ 400a - Lease for mining purposes of land reserved for agency or school; disposition of proceeds; royalty

§ 401 - Leases for mining purposes of unallotted lands in Kaw Reservation

§ 402 - Leases of surplus lands

§ 402a - Lease of unallotted irrigable lands for farming purposes

§ 403 - Leases of lands held in trust

§ 403a - Lease of lands on Port Madison and Snohomish or Tulalip Indian Reservations in Washington

25 U.S. Code § 332, 333 - Repealed.

25 U.S. Code § 332, 333 - Repealed.

§ 403b - Lease of restricted lands in State of Washington

§ 403c - Identity of lessor; period of lease

§ 404 - Sale on petition of allottee or heirs

§ 405 - Sale of allotment of noncompetent Indian

§ 406 - Sale of timber on lands held under trust

§ 407 - Sale of timber on unallotted lands

§ 407a to 407c - Omitted

§ 407d - Charges for special services to purchasers of timber

§ 408 - Surrender of allotments by relinquishment for benefit of children

§ 409 - Sale of lands within reclamation projects

§ 409a - Sale of restricted lands; reinvestment in other restricted lands

§ 410 - Moneys from lease or sale of trust lands not liable for certain debts

§ 411 - Interest on moneys from proceeds of sale

§ 412 - Payment of taxes from share of allottee in tribal funds

§ 412a - Exemption from taxation of lands subject to restrictions against alienation; determination of homestead

§ 413 - Fees to cover cost of work performed for Indians

§ 414 - Reservation of minerals in sale of Choctaw-Chickasaw lands

§ 415 - Leases of restricted lands

§ 415a - Lease of lands of deceased Indians for benefit of heirs or devisees

§ 415b - Advance payment of rent or other consideration

§ 415c - Approval of leases

§ 415d - Lease of restricted lands under other laws unaffected

§ 416 - Leases of trust or restricted lands on San Xavier and Salt River Pima-Maricopa Indian Reservations for public, religious, educational, recreational, residential, business, farming or grazing purposes

§ 416a - Lease provisions

§ 416b - Development pursuant to lease

§ 416c - Lease of lands of deceased Indians for benefit of heirs or devisees

§ 416d - Advance payment of rent or other consideration

§ 416e - Approval of leases

§ 416f - Dedication of land for public purposes

§ 416g - Contract for water, sewerage, law enforcement, or other public services

§ 416h - Zoning, building, and sanitary regulations

§ 416i - Restrictions

§ 416j - Mission San Xavier del Bac

§ 2101 - Definitions

§ 2102 - Minerals Agreements

§ 2103 - Secretary’s determination on Minerals Agreements

§ 2104 - Secretary’s review of prior Minerals Agreements

§ 2105 - Effect of other provisions

§ 2106 - Assistance to tribes or individuals during Minerals Agreement negotiations

§ 2107 - Regulations; consultation with Indian organizations; pending agreements

§ 2108 - Tribal right to develop mineral resources


§ 181 - Lands subject to disposition; persons entitled to benefits; reciprocal privileges; helium rights reserved

§ 182 - Lands disposed of with reservation of deposits of coal, etc.

§ 183 - Cancellation of prospecting permits

§ 184 - Limitations on leases held, owned or controlled by persons, associations or corporations

§ 184a - Authorization of States to include in agreements for conservation of oil and gas resources lands acquired from United States

§ 185 - Rights-of-way for pipelines through Federal lands

§ 186 - Reservation of easements or rights-of-way for working purposes; reservation of right to dispose of surface of lands; determination before offering of lease; easement periods

§ 187 - Assignment or subletting of leases; relinquishment of rights under leases; conditions in leases for protection of diverse interests in operation of mines, wells, etc.; State laws not impaired

§ 187a - Oil or gas leases; partial assignments

§ 187b - Oil or gas leases; written relinquishment of rights; release of obligations

§ 188 - Failure to comply with provisions of lease

§ 188a - Surrender of leases

§ 189 - Rules and regulations; boundary lines; State rights unaffected; taxation

§ 190 - Oath; requirement; form; blanks

§ 191 - Disposition of moneys received

§ 191a - Late payment charges under Federal mineral leases

§ 191b - Collection of unpaid and underpaid royalties and late payment interest owed by lessees

§ 192 - Payment of royalties in oil or gas; sale of such oil or gas

§ 192a - Cancellation or modification of contracts

§ 192b - Application to contracts

§ 192c - Rules and regulations governing issuance of certain leases; disposition of receipts

§ 193 - Disposition of deposits of coal, and so forth

§ 193a - Preference right of United States to purchase coal for Army and Navy; price for coal; civil actions; jurisdiction

§ 194 - Repealed.

§ 195 - Enforcement

§ 196 - Cooperative agreements; delegation of authority

§ 351 - Definitions

§ 352 - Deposits subject to lease; consent of department heads; lands excluded

§ 353 - Sale of lands unaffected; reservation of mineral rights; sale subject to prior lease; naval petroleum reserves unaffected

§ 354 - Lease of partial or future interests in deposits

§ 355 - Disposition of receipts

§ 356 - Furnishing description of lands and title documents; recordation of documents; authenticated copies

§ 357 - State or local government rights; taxation

§ 358 - Rights under prior leases; priority of pending applications; exchange of leases

§ 359 - Rules and regulations

§ 360 - Authority to manage certain mineral leases

§ 1001 - Definitions

§ 1002 - Lands subject to geothermal leasing

§ 1002a - Repealed.

§ 1003 - Leasing procedures

§ 1004 - Rents and royalties

§ 1005 - Lease term and work commitment requirements

§ 1006 - Acreage limitations

§ 1007 - Readjustment of lease terms and conditions

§ 1008 - Byproducts

§ 1009 - Relinquishment of geothermal rights

§ 1010 - Suspension of operations and production

§ 1011 - Termination of leases

§ 1012 - Waiver, suspension, or reduction of rental or royalty

§ 1013 - Surface land use

§ 1014 - Lands subject to geothermal leasing

§ 1015 - Requirement for lessees

§ 1016 - Administration

§ 1017 - Unit and communitization agreements

§ 1018 - Data from Federal agencies

§ 1019 - Disposal of moneys from sales, bonuses, rentals, and royalties

§ 1020 - Publication in Federal Register; reservation of mineral rights

§ 1021 - Federal exemption from State water laws

§ 1022 - Prevention of waste; exclusivity

§ 1023 - Rules and regulations

§ 1024 - Inclusion of geothermal leasing under certain other laws

§ 1025 - Federal reservation of certain mineral rights

§ 1026 - Significant thermal features

§ 1027 - Land subject to prohibition on leasing

§ 1028 - Hot dry rock geothermal energy

§ 1701 - Congressional statement of findings and purposes

§ 1702 - Definitions

U.S. Code: Title 31 - MONEY AND FINANCE
U.S. Code: Title 43 - PUBLIC LANDS

§ 1301 - Definitions

§ 1302 - Resources seaward of Continental Shelf

§ 1303 - Amendment, modification, or repeal of other laws

§ 1331 - Definitions

§ 1332 - Congressional declaration of policy

§ 1333 - Laws and regulations governing lands

§ 1334 - Administration of leasing

§ 1335 - Validation and maintenance of prior leases

§ 1336 - Controversies over jurisdiction; agreements; payments; final settlement or adjudication; approval of notice concerning oil and gas operations in Gulf of Mexico

§ 1337 - Leases, easements, and rights-of-way on the outer Continental Shelf

§ 1338 - Disposition of revenues

§ 1338a - Moneys received as a result of forfeiture by Outer Continental Shelf permittee, lessee, or right-of-way holder; return of excess amounts

§ 1339 - Repealed.

§ 1340 - Geological and geophysical explorations

§ 1341 - Reservation of lands and rights

§ 1342 - Prior claims as unaffected

§ 1343 - Repealed.

§ 1344 - Outer Continental Shelf leasing program

§ 1345 - Coordination and consultation with affected State and local governments

§ 1346 - Environmental studies

§ 1347 - Safety and health regulations

§ 1348 - Enforcement of safety and environmental regulations

§ 1349 - Citizens suits, jurisdiction and judicial review

§ 1350 - Remedies and penalties

§ 1351 - Oil and gas development and production

§ 1352 - Oil and gas information program

§ 1353 - Federal purchase and disposition of oil and gas

§ 1354 - Limitations on export of oil or gas

§ 1355 - Restrictions on employment of former officers or employees of Department of the Interior

§ 1356 - Documentary, registry and manning requirements

§ 1356a - Coastal impact assistance program

§ 1801 - Congressional findings

§ 1802 - Congressional declaration of purposes

Title 30 published on 2014-07-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 30 CFR Part 1206 after this date.

  • 2015-05-01; vol. 80 # 84 - Friday, May 1, 2015
    1. 80 FR 24794 - Indian Oil Valuation Amendments
      GPO FDSys XML | Text
      DEPARTMENT OF THE INTERIOR, Office of Natural Resources Revenue
      Final rule.
      Effective date: July 1, 2015.
      30 CFR Parts 1206 and 1210