EXCLUSION FROM THE ESTATE OF INTERESTS IN LIQUID AND GASEOUS HYDROCARBONS TRANSFERRED BY THE DEBTOR PURSUANT TO PRODUCTION PAYMENT AGREEMENTS.

SEC. 208. EXCLUSION FROM THE ESTATE OF INTERESTS IN LIQUID AND GASEOUS HYDROCARBONS TRANSFERRED BY THE DEBTOR PURSUANT TO PRODUCTION PAYMENT AGREEMENTS. (a) Definition.— Section 101 of title 11, United States Code, is amended— (1) by inserting after paragraph (42) the following: “(42A) ‘production payment’ means a term overriding royalty satisfiable in cash or in kind— “(A) contingent on the production of a liquid or gaseous hydrocarbon from particular real property; and “(B) from a specified volume, or a specified value, from the liquid or gaseous hydrocarbon produced from such property, and determined without regard to production costs;”, and (2) by inserting after the first paragraph (56) the following: “(56A) ‘term overriding royalty’ means an interest in liquid or gaseous hydrocarbons in place or to be produced from particular real property that entitles the owner thereof to a share of production, or the value thereof, for a term limited by time, quantity, or value realized;”. (b) Property of the Estate.— Section 541(b)(4) of title 11, United States Code, is amended— (1) in subparagraph (A) by striking “(A)” and inserting “(A)(i)”, (2) in subparagraph (B)— (A) by striking “(B)” and inserting “(ii)”, (B) by striking “such interest” and inserting “the interest referred to in clause (i)”, and (C) by striking the period at the end and inserting “; or”, and (3) by adding at the end the following: “(B) (i) the debtor has transferred such interest pursuant to a written conveyance of a production payment to an entity that does not participate in the operation of the property from which such production payment is transferred; and 108 STAT. 4125 “(ii) but for the operation of this paragraph, the estate could include the interest referred to in clause (i) only by virtue of section 542 of this title;”.