PRIOR PRINTER'S NO. 1842
PRINTER'S NO. 1939
THE GENERAL ASSEMBLY OF PENNSYLVANIA
INTRODUCED BY EVERETT, GERGELY, ROZZI, PASHINSKI, F. KELLER, MILLARD, METZGAR, GODSHALL, MAHONEY, MIRABITO, CUTLER, QUINN, GINGRICH, MAJOR, HESS, TOOHIL, COHEN, AUMENT, BAKER, MUSTIO, KULA, GIBBONS, KORTZ, CARROLL, LAWRENCE, CHRISTIANA, VEREB, MOUL, DENLINGER, ENGLISH, MURT AND MARSHALL, MAY 16, 2013
AS REPORTED FROM COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY, HOUSE OF REPRESENTATIVES, AS AMENDED, JUNE 4, 2013
1Amending the act of July 20, 1979 (P.L.183, No.60), entitled "An
2act regulating the terms and conditions of certain leases
3regarding natural gas and oil," further providing for
4validity of leases and guaranteeing a royalty; adding
5definitions; providing for apportionment; further providing
6for commencement of guaranteed royalty; providing for payment
7information to interest owners and for accumulation of
8proceeds from production; and making editorial changes.
14[Section 1. A lease or other such agreement conveying the
15right to remove or recover oil, natural gas or gas of any other
16designation from lessor to lessee shall not be valid if such
17lease does not guarantee the lessor at least one-eighth royalty
18of all oil, natural gas or gas of other designations removed or
19recovered from the subject real property.]
1Section 2. The act is amended by adding sections to read:
2Section 1.1. Short title.
5Section 1.2. Definitions.
9"Check stub." The financial record attached to a check.
20"Mcf." A unit of measurement expressed by 1,000 cubic feet.
21"Qualified escrow account." An escrow account administered
22by a noninterested party which must be a financial institution
23licensed by the Department of Banking and Securities of the
25Section 1.3. Royalty guaranteed.
26A lease or other such agreement conveying the right to remove
27or recover oil, natural gas or gas of any other designation from
28the lessor to the lessee shall not be valid if the lease does
29not guarantee the lessor at least one-eighth royalty of all oil,
30natural gas or gas of other designation removed or recovered
1from the subject real property.
2Section 3. Section 2 of the act is amended to read:
6An oil, natural gas or other designation gas well or oil,
7natural gas or other designation gas lease which does not
8provide a one-eighth metered royalty shall be subject to [such]
9an escalation equal to one-eighth metered royalty when its
10original state is altered by new drilling, deeper drilling,
11redrilling, artificial well stimulation, hydraulic fracturing or
12any other procedure [for increased] to increase production. A
13lease shall not be affected when the well is altered through
14routine maintenance or cleaning.
15Section 4. The act is amended by adding a section to read:
16Section 2.1. Apportionment.
17Where an operator has the right to develop multiple
18contiguous leases separately, the operator may develop those
19leases jointly by horizontal drilling unless expressly
20prohibited by a lease. In determining the royalty where multiple
21contiguous leases are developed, in the absence of an agreement
22by all affected royalty owners, the production shall be
23allocated to each lease in <-proportion to the amount of
24production <-such proportion as the operator reasonably determines
25to be attributable to each lease.
26Section 5. Section 3 of the act is amended to read:
28Section 3. Commencement of guaranteed royalty.
1date of this act] September 18, 1979, metering and the [above]
2royalty required under section 1.3 or 2 shall commence [within
390 days after the effective date of this act] not later than
4December 17, 1979.
5Section 6. The act is amended by adding sections to read:
6Section 3.1. Payment information to interest owners.
7Whenever payment is made for oil or gas production to an
8interest owner, whether pursuant to a division order, lease,
9servitude or other agreement, all of the following information,
10at a minimum, shall be included on the check stub or on an
11attachment to the form of payment, unless the information is
12otherwise provided on a regular basis:
13(1) A name, number or combination of name and number
14that identifies the lease, property, unit or well or wells
15for which payment is being made and the county in which the
16lease, property or well is located.
17(2) Month and year of gas production.
20(4) Price received per barrel, Mcf or gallon.
7Section 3.2. Accumulation of proceeds from production.
8(a) General rule.--Proceeds from production of oil and gas
9may be accumulated and remitted to the persons entitled thereto
10annually for the 12 months' accumulation of proceeds totaling
11less than $100.
12(b) Owner to be paid.--Notwithstanding any other provision
13of this section to the contrary, all accumulated proceeds shall
14be paid to the owner thereof when production ceases or upon
15relinquishment or transfer of the payment responsibility.
16(c) Qualified escrow accounts.--Any escrow account
17established by a lessee to accumulate funds payable to a lessor
18shall be a qualified escrow account. An administrator of a
19qualified escrow account shall deliver to the lessor or, if
20ownership is in dispute, the potential owner an annual statement
21with the same information as if a proceeds check had been
22issued, as well as the rate of interest for the qualified escrow
24(d) Conflicts.--If there is any conflict between a division
25order and an oil and gas lease, the terms and conditions of the
26oil and gas lease shall control. A division order may not amend
27or supplement the terms and conditions of an oil and gas lease.
28Section 7. Section 4 of the act is amended to read:
30Section 4. Effective date.
1This act shall take effect [in 60 days] September 18, 1979.
2Section 8. The addition of section 1.3 of the act is a
3continuation of former section 1 of the act. Any reference in
4any lease or other such agreement to former section 1 of the act
5shall be deemed to be a reference to section 1.3 of the act.
9Section 10. This act shall take effect in 60 days.