About Us

What are the goals of the KOGRF and who are its members?

What is the Kansas Oil and Gas Resources Fund, Inc.?

The Kansas Oil and Gas Resources Fund, Inc., (the Fund) is a non-profit business in the oil, natural gas and natural gas liquids industry to promote the petroleum industry.

What is the purpose of the fund?

The Kansas Oil and Gas Resources Fund was created to:

1. Coordinate a program to demonstrate to the general public the important and significance of the oil and natural gas industry in Kansas.
2. Encourage the wise and efficient use of energy.
3. Promote environmentally sound production methods and technologies.
4. Support research and educational activities concerning the oil and natural gas industry.
5. Promote oil and natural gas exploration and production safety.
6. Support job training and research activities concerning oil and natural gas production.
7. Implement and comply with the provision of the act.

What is the goal of the Kansas Oil & Gas Resources Fund, Inc.?

The goal of the Kansas Oil & Gas Resources Fund, Inc. is to improve the image and credibility of the Kansas oil and gas industry.

How does the Kansas Oil & Gas Resources Fund, Inc. accomplish this goal?

The Kansas Oil and Gas Resources Fund, Inc. accomplishes this goal through two strategies:

1. An education campaign designed to increase awareness about the significance and viability of the Kansas oil and gas industry, and
2. A public relations campaign designed to improve the image and credibility of the Kansas oil and gas industry through innovative marketing strategies.

Who is eligible to be a member of the board of the Kansas Oil and Gas Resources Fund?

Membership is comprised of ten representatives of members of the Kansas Independent Oil and Gas Association, two representatives of members the Eastern Kansas Oil and Gas Association, and three representatives of members of the Kansas Petroleum Council. Representatives of members who apply for full refunds of the assessment are not eligible to be members of the board of directors.

How are assessments for KOGRF determined?

How is the Kansas Oil and Gas Resources Fund authorized to collect assessments?

The Kansas Oil and Gas Resources Fund was created by the Kansas petroleum education and marketing act (K.S.A 2006 Supp. 55-1625 through 55-1635, and amendments thereto). The law created a non-governmental entity to collect and disseminate funds for its defined purposes.

How much is the assessment?

The assessment is 0.05 percent (0.05% or 0.0005 decimal interest) of the gross proceeds from the sale of oil, natural gas, or natural gas liquids.

Who is assessed for the Oil and Gas Resources Fund?

The assessment is to be deducted only from working interests proceeds. Royalty and overriding royalty interests are exempt from the assessment.

Who is responsible for collecting the assessment?

The assessment is to be paid by the first purchaser who is the entity where title transfers beyond the gathering tank or tanks for crude oil or natural gas liquids, or beyond the inlet side of the measurement station for natural gas. The board, however, may permit or require an entity other than the first purchaser to deduct such proceeds where that entity is the operator or the entity distributes revenues to interest owners, directly or indirectly.

Where is the assessment to be sent?

The assessment is to be sent to the:

Kansas Oil and Gas Resources Fund, Inc. P.O. Box 757 Wichita, KS 67201-0757

How often is the assessment to be withheld?

The assessment is to be withheld from the taxable gross revenue paid on crude oil and natural gas.

Is the assessment mandatory?

No. The assessment is voluntary. Anyone who has been assessed may seek a refund on their revenue, plus interest, from the board of the Kansas Oil and Gas Resources Fund annually.

If the assessment is voluntary, can participation be withheld from the Fund?

No. Current oil and gas accounting systems do not provide opting out of the assessment program in the beginning.

How is the assessment to be refunded?

Persons or companies requesting a refund shall execute an affidavit showing the amount of refund requested, demonstrating that the affiant was the owner of the production for which the assessment was withheld. The board may adopt rules and procedures to verify the accuracy of the request prior to issuance of the refund.

How often can refunds be requested?

Any person or company subject to the assessment may request a refund of the assessment paid on production for the proceeding calendar year. The board of the Oil and Gas Resources Fund shall refund to each person or company requesting a refund on the assessment paid by or on behalf of the person or company during the preceding year.

Who manages the Kansas Oil and Gas Resources Fund?

The fund is managed by a Board of Directors comprised fifteen members from the oil and gas industry.

Is the Kansas Oil and Gas Resources Fund, Inc., a charitable organization?

No. The Kansas Oil and Gas Resources Fund is organized under the Internal Revenue code as a 501(c)6 organization. Assessments collected by the fund can be treated as dues to a trade organization.

Can the operator file a refund request on behalf of the working interest owners?

The operator cannot file a blanket request for a refund on behalf of multiple interest owners. However, the operator could prepare the forms and documentation for their working interest owners to submit. The working interest owner would be required to sign their individual refund claim form.

Is the assessment captured on gross revenue, or after severance tax and the production levy have been withheld?

The assessment is applied to the gross revenue before deducting severance tax or the production levy.

When the First purchaser pays a working interest owner 100% of the revenue, but the lease property is operated by a contract operator, should the First Purchaser also notify the working interest owner of the act? Would the working interest owner be considered the producer or operator under this circumstance?

Yes, the working interest owner should be notified of the act and their potential responsibility if they fail to cooperate.

When the First Purchaser pays 100% of the revenue to an interest owner who drilled a well on their land and are the operator and royalty owner, how should the assessment be made?

In those instances, it could be judged to be a 100% royalty and not subject to the assessment.

If the First Purchaser has requested the working interest net revenue interest from the producer and the producer has failed to comply with the request, is the First Purchaser liable for making the assessment anyway?

No. If a producer fails to cooperate with the First Purchaser in complying with the act, the responsibility for enforcement of the act will fall to the Kansas Oil and Gas Resources Fund, Inc. The First Purchaser should be prepared to provide documentation of their effort to obtain the cooperation of the producer if requested.

How are legal and accounting procedures handled?

From whom is the assessment to be collected?

The assessment is to be collected from the working interest owner only. Royalty owners and overriding royalty owners are exempt from the assessment.

Can one elect not to be subject to the assessment before it is withheld?

No. The ‘opt out’ election was removed from the act in House Bill 2485 during the 2007 legislative session. The ‘opt out’ provision was impossible to implement in current accounting systems used by industry today.

Who is responsible for collecting and submitting the assessment?

The primary responsibility for collecting and submitting the assessment belongs to the first purchaser. If the first purchaser does not have or is unable to calculate the net revenue interest for working interest, they shall contact the producer of the lease or property and obtain the net revenue interest for working interest from the producer. The first purchaser and producer can rely on the net revenue interest for working interests reported on the renditions for ad valorem taxes that are submitted annually to the county appraiser for the property.

If the First Purchaser has requested the net revenue interest for working interest from the producer and the producer has failed to comply with the request, is the First Purchaser liable for making the assessment anyway?

No. Enforcement of the Kansas Education and Marketing Act shall be the responsibility of the Kansas Oil and Gas Resources Fund, Inc. The First Purchaser shall provide a list of those producers that have failed to cooperate along with their contact information to the Kansas Oil and Gas Resources Fund, Inc.

Is the assessment captured on gross revenue, or after severance tax and the production levy have been withheld?

The assessment is applied to the gross revenue before deducting severance tax or the conservation levy. The Kansas Oil and Gas Resources Fund has determined that the assessment should be applied to the same gross revenue amount used for calculating Kansas severance tax and would be assessed before deductions for the severance tax or the conservation levy for the Kansas Corporation Commission.

Who is responsible for submitting the assessment on split stream sales, or for payment-in- kind?

Producers accepting payment-in-kind or sharing production with other producers in a property will be responsible arranging the collection of the assessment with their individual first purchaser. Producers who accept payment-in-kind from a property and who sell their oil or gas independently of others in the same property will be responsible for collecting and submitting the assessment.

When the first purchaser pays 100% of the revenue to an interest owner who drilled a well on their land and are the producer and royalty owner, how should the assessment be made?

In those instances, the interest could be judged to be a 100% royalty and would not be subject to the assessment.

When the first purchaser pays a working interest owner 100% of the revenue, but the lease property is operated by a contract operator, should the first purchaser also notify the working interest owner of the act? Would the working interest owner be considered the producer under this circumstance?

Yes, the working interest owner should be notified of the act and their potential responsibility if they fail to cooperate.

May a producer bill the assessment to its working interests rather than withhold it during revenue distribution?

The producer can collect and withhold the assessment through their revenue distribution system or by billing it on their joint interest billings. Producers desiring to bill the assessment on their joint interest billings should review their operating agreements with their interest owners to satisfy themselves that the assessment is a billable expense.

If a producer bills the assessment through their joint interest billings, aren’t they exposing themselves to a risk of collecting the assessment from their working interest owners?

Yes.

When is the assessment to be collected and submitted for working interest held in suspense?

The assessment is to be collected at the time payment is to be made on production, not when the interest is removed from suspense.

Will the first purchaser or producer be required to submit detail records either by lease or by working interest owner, of the amount collected and submitted to the Kansas Oil and Gas Resources Fund?

No, the first purchaser or producer will only be required to report the gross revenue on which the assessment was calculated and the amount of the assessment derived there from. This would be the aggregate gross revenue for the month.

What if the first purchaser or producer determines that they have either under paid or over paid the amount due?

The first purchaser or producer can make an adjustment to the amount payable during each submittal of funds. The submittal form will provide one line to report prior overpayments to be deducted and a separate line for prior underpayments to be added to the amount submitted to the Kansas Oil and Gas Resources Fund, Inc.

What documentation will be required when submitting the refund request?

The board members are attempting to strike a balance between leniency in the request with the need to ensure that they do not pay out fraudulent claims. It is recognized that this is a high priority subject that needs a prompt answer for the industry to comply.

Will the Kansas Oil and Gas Resources Fund rely on a 1099 from a working interest owner as sufficient evidence for seeking a refund?

For the first year, the 1099 prepared for 2008 revenue record would include payment for oil, gas or natural gas liquids in December, 2007, which cause the 1099 to not accurately reflect the amount of revenue withheld.

Can the producer file a refund request on behalf of the working interest owners?

Each individual working interest owner will be responsible for filing their own refund requests. Working interest owners seeking a refund will be required to sign their individual refund claim form. The producer cannot file a blanket request for a refund on behalf of individual or multiple interest owners. However, the producer could prepare the forms and documentation for their working interest owners.