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10certain leases regarding natural gas and oil," is repealed: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 Oil and Gas
20Lease Act.

1Section 1.2.  Definitions.

2The following words and phrases when used in this act shall
3have the meanings given to them in this section unless the
4context clearly indicates otherwise:

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

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

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

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

15Section 1.3.  Royalty guaranteed.

16A lease or other such agreement conveying the right to remove
17or recover oil, natural gas or gas of any other designation from
18the lessor to the lessee shall not be valid if the lease does
19not guarantee the lessor at least one-eighth royalty of all oil,
20natural gas or gas of other designations removed or recovered
21from the subject real property.

22Section 3.  Section 2 of the act is amended to read:

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

1Section 2.  Escalation required for alteration to original
2state.

3An oil, natural gas or other designation gas well or oil, 
4natural gas or other designation gas lease which does not 
5include a one-eighth metered royalty shall be subject to an 
6escalation equal to one-eighth metered royalty when its original 
7state is altered by new drilling, deeper drilling, redrilling, 
8artificial well stimulation, hydraulic fracturing or any other 
9procedure to increase production. A lease shall not be affected 
10when the well is altered through routine maintenance or 
11cleaning.

12Section 4.  The act is amended by adding sections to read:

13Section 3.1.  Commencement of guaranteed royalty.

14Whenever a procedure to increase production has been
15completed prior to the effective date of this section, metering
16and the royalty required under section 1.3 or 2 shall commence
17within 90 days after the effective date of this section.

18Section 3.2.  Payment information to interest owners.

19Whenever payment is made for oil or gas production to an
20interest owner, whether pursuant to a division order, lease,
21servitude or other agreement, all of the following information
22shall be included on the check stub or on an attachment to the
23form of payment, unless the information is otherwise provided on
24a regular basis:

25(1)  A name, number or combination of name and number 
26that identifies the lease, property, unit or well or wells 
27for which payment is being made; and the county in which the 
28lease, property or well is located.

29(2)  Month and year of gas production.

30(3)  Total barrels of crude oil or number of Mcf of gas 
 

1or volume of natural gas liquids sold.

2(4)  Price received per barrel, Mcf or gallon.

3(5)  Total amount of severance and other production taxes
4and other deductions permitted under the lease, with the
5exception of windfall profit tax.

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

8(7)  Interest owner's interest, expressed as a decimal or
9fraction, in production from paragraph (1).

10(8)  Interest owner's share of the total value of sales 
11prior to deduction of taxes and deductions from paragraph 
12(5).

13(9)  Interest owner's share of the sales value less the 
14interest owner's share of taxes and deductions from paragraph 
15(5).

16(10)  Contact information, including an address and
17telephone number.

18Section 3.3.  Accumulation of proceeds from production.

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

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

27Section 5.  Section 4 of the act is amended to read:

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

29Section 4.  Effective date.

30This act shall take effect in 60 days.

1Section 6.  This act shall take effect in 60 days.