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," adding definitions; providing
4for payment information to interest owners for accumulation
5of proceeds from production; and making editorial changes.

6The General Assembly of the Commonwealth of Pennsylvania
7hereby enacts as follows:

8Section 1. Section 1 of the act of July 20, 1979 (P.L.183,
9No.60), entitled "An act regulating the terms and conditions of
10certain leases regarding natural gas and oil," is repealed:

11[Section 1. A lease or other such agreement conveying the
12right to remove or recover oil, natural gas or gas of any other
13designation from lessor to lessee shall not be valid if such
14lease does not guarantee the lessor at least one-eighth royalty
15of all oil, natural gas or gas of other designations removed or
16recovered from the subject real property.]

17Section 2. The act is amended by adding sections to read:

18Section 1.1. Short title.

19This act shall be known and may be cited as the Leaseholder

1Royalty Reform and Disclosure Act.

2Section 1.2. Definitions.

3The following words and phrases when used in this act shall
4have the meanings given to them in this section unless the
5context clearly indicates otherwise:

6"Check stub." The financial record attached to a check.

7"Division order." An agreement signed by an interest owner 
8directing the distribution of proceeds from the sale of oil, 
9gas, casing head gas or other related hydrocarbons. The order 
10shall direct and authorize the payor to make payment for the 
11products taken in accordance with the division order.

12"Interest owner." A person who is legally entitled to 
13payment from the proceeds derived from the sale of oil or gas 
14from an oil or gas well located in this Commonwealth.

15"Mcf." A unit of measurement expressed by 1,000 cubic feet.

16Section 1.3. Royalty guaranteed.

17A lease or other such agreement conveying the right to remove
18or recover oil, natural gas or gas of any other designation from
19the lessor to the lessee shall not be valid if the lease does
20not guarantee the lessor at least one-eighth royalty of all oil,
21natural gas or gas of other designations removed or recovered
22from the subject real property.

23Section 3. Section 2 of the act is amended to read:

24[Section 2. An oil, natural gas or other designation gas
25well or oil, natural gas or other designation gas lease which
26does not provide a one-eighth metered royalty shall be subject
27to such an escalation when its original state is altered by new
28drilling, deeper drilling, redrilling, artificial well
29stimulation, hydraulic fracturing or any other procedure for
30increased production. A lease shall not be affected when the

1well is altered through routine maintenance or cleaning.]

2Section 2. Escalation required for alteration to original
3state.

4An oil, natural gas or other designation gas well or oil, 
5natural gas or other designation gas lease which does not 
6include a one-eighth metered royalty shall be subject to an 
7escalation equal to one-eighth metered royalty when its original 
8state is altered by new drilling, deeper drilling, redrilling, 
9artificial well stimulation, hydraulic fracturing or any other 
10procedure to increase production. A lease shall not be affected 
11when the well is altered through routine maintenance or 
12cleaning.

13Section 4. The act is amended by adding sections to read:

14Section 3.1. Commencement of guaranteed royalty.

15Whenever a procedure to increase production has been
16completed prior to the effective date of this section, metering
17and the royalty required under section 1.3 or 2 shall commence
18after December 17, 1979.

19Section 3.2. Payment information to interest owners.

20Whenever payment is made for oil or gas production to an
21interest owner, whether pursuant to a division order, lease,
22servitude or other agreement, all of the following information, 
23at a minimum, shall be included on the check stub or on an
24attachment to the form of payment, unless the information is
25otherwise provided on a regular basis:

26(1) A name, number or combination of name and number 
27that identifies the lease, property, unit or well or wells 
28for which payment is being made; and the county in which the 
29lease, property or well is located.

30(2) Month and year of gas production.

1(3) Total barrels of crude oil or number of Mcf of gas 
2or volume of natural gas liquids sold.

3(4) Price received per barrel, Mcf or gallon.

4(5) Total amount of severance and other production taxes
5and other deductions permitted under the lease, with the
6exception of windfall profit tax.

7(6) Net value of total sales from the property less 
8taxes and deductions from paragraph (5).

9(7) Interest owner's interest, expressed as a decimal or
10fraction, in production from paragraph (1).

11(8) Interest owner's share of the total value of sales 
12prior to deduction of taxes and deductions from paragraph 
13(5).

14(9) Interest owner's share of the sales value less the 
15interest owner's share of taxes and deductions from paragraph 
16(5).

17(10) Contact information, including an address and
18telephone number.

19Section 3.3. Accumulation of proceeds from production.

20(a) General rule.--Proceeds from production of oil and gas 
21may be accumulated and remitted to the persons entitled thereto 
22annually for the 12 months' accumulation of proceeds totaling 
23less than $100.

24(b) Owner to be paid.--Notwithstanding any other provision 
25of this section to the contrary, all accumulated proceeds shall 
26be paid to the owner thereof when production ceases or upon 
27relinquishment or transfer of the payment responsibility.

28Section 5. Section 4 of the act is amended to read:

29[Section 4. This act shall take effect in 60 days.]

30Section 4. Effective date.

1This act shall take effect in 60 days.

2Section 6. This act shall take effect in 60 days.