Relating to the plugging of and reporting on inactive wells subject to the jurisdiction of the Railroad Commission of Texas; authorizing an administrative penalty.

Contracts

• Purchase & Sale Agreements (PSAs): Due diligence periods must be extended to verify the "15/25" status of all wellbores. Indemnity clauses must be rewritten to address SB1150 liabilities.
• Joint Operating Agreements (JOAs): Review language regarding "required operations." Non-operators may resist cash calls for the new, expensive individual bonds or mandatory testing.
• Lending Covenants: Review credit facilities immediately. The requirement to post cash collateral or individual bonds for inactive inventory may trigger liquidity covenants or borrowing base redeterminations.

Hiring/Training

• External Audit: You must engage a CPA firm immediately if you intend to file for "Financial Hardship" extensions; internal P&Ls are no longer legally sufficient.
• Field Operations: Field managers must be trained on the new mandatory annual fluid level or hydraulic pressure testing protocols for all 15+ year inactive wells.

Reporting & Record-Keeping

• Transfer Affirmations: A new joint affirmation form is required for asset sales involving inactive wells, certifying "good faith business practice" and "continued compliance."
• Compliance Plans: If opting for a time-based extension, you must draft and file a binding legal schedule to plug or reactivate the well by September 1, 2042.
• Testing Data: Results of annual fluid/pressure tests must be retained and reported to the RRC annually.

Fees & Costs

• Bonding (Major Impact): If you cannot secure a hardship or compliance plan extension, you must post an Individual Performance Bond equal to the *full cost* of plugging that specific well. This replaces low-cost blanket bonds.
• Testing Costs: Budget for annual wireline or service rig costs for every well inactive >15 years.
• Penalties: New administrative penalties will be assessed for violations of Section 89.023 (amounts TBD by rulemaking).