2023 Alaska Statutes › Title 44. State Government › Chapter 37. Department of Natural Resources › Article 4. Tax Credit Certificates and Overriding Royalties. › Sec. 44.37.230. Duties of the department with respect to purchases of tax credit certificates and overriding royalty interest agreements.

(a) The department shall provide necessary information to and consult with the Department of Revenue to determine whether a discount rate is applicable under AS 43.55.028(m).
(b) The department may enter into an overriding royalty interest agreement in favor of the state with an applicant that requests a purchase by the Department of Revenue under AS 43.55.028 from money disbursed to the commissioner of revenue from the Alaska Tax Credit Certificate Bond Corporation reserve fund established in AS 37.18.040 of a transferable tax credit certificate issued under AS 43.55.023 or production tax credit certificate issued under AS 43.55.025. The department may enter into an agreement only if the anticipated net present value from the agreement to the state is equal to or greater than the remainder of the value of the tax credit certificate requested for purchase at the proposed reduced discount rate under AS 43.55.028(m)(2), subtracted from the value of the tax credit certificate requested for purchase in the absence of the agreement.
(c) An applicant requesting a reduced discount rate under AS 43.55.028(m)(2) shall submit a proposed agreement to the department. The proposed agreement must include
(1) a description of the lease or leases in which the applicant holds a working interest that are subject to the proposed agreement;
(2) the overriding royalty interest in oil produced from the lease or leases offered to the state under the proposed agreement expressed as a percentage of the total oil produced from the lease or leases; a percentage proposed under this paragraph may not exceed the working interest of the applicant.
(d) The monthly payment to the state under an agreement is calculated by multiplying the prevailing value of the monthly oil production from the lease or leases subject to the agreement by the product of the total monthly volume of oil production from the lease or leases subject to the agreement and the percent of total oil production offered to the state under the agreement. A deduction may not be applied to a payment calculated under this subsection. The Department of Revenue shall determine and post on its Internet website the prevailing value of the oil under AS 43.55 as provided in regulation.
(e) The amount of an underpayment or overpayment of a monthly payment for a payment in an agreement bears interest in each calendar quarter at the rate of 5.25 percentage points above the annual rate charged to member banks for advances by the 12th Federal Reserve District as of the first day of that calendar quarter, compounded quarterly as of the last day of that quarter.
(f) When evaluating an agreement, the department shall consider
(1) the anticipated costs to issue and administer a bond under AS 37.18 if the tax credit certificate is purchased at a reduced discount rate under AS 43.55.028(m)(2);
(2) the production or projected production from a lease subject to the proposed agreement;
(3) the value or projected value of the oil produced from a lease subject to the proposed agreement;
(4) the timing for production from a lease subject to the proposed agreement;
(5) the likelihood of production from a lease subject to the proposed agreement;
(6) the existence of and burdens on other interests on a lease subject to the proposed agreement;
(7) cost data or financial information submitted with the proposed agreement; and
(8) other information submitted with the proposed agreement.
(g) The department may request from an applicant additional information necessary to make a determination under (f) of this section. Before an agreement may be entered into, an applicant shall provide the information requested by the department under this subsection.
(h) The department may enter into an agreement necessary to carry out the purpose of this section, including an agreement to maintain the confidentiality of information submitted to the department to evaluate an overriding royalty interest agreement.
(i) The department shall separately account for the revenue collected from an agreement that the department deposits in the general fund. The legislature may appropriate the annual estimated balance in the account to the Alaska Tax Credit Certificate Bond Corporation reserve fund established under AS 37.18.040.
(j) In this section, unless the context requires otherwise,
(1) “agreement” means an overriding royalty interest agreement described in this section;
(2) “applicant” includes an agent or representative of the applicant;
(3) “department” means the Department of Natural Resources.