PRIOR PRINTER'S NOS. 181, 341
PRINTER'S NO. 1290
THE GENERAL ASSEMBLY OF PENNSYLVANIA
INTRODUCED BY YAW, BAKER, FONTANA, RAFFERTY, FOLMER, VOGEL, WAUGH, BROWNE, McILHINNEY, VULAKOVICH AND HUGHES, JANUARY 18, 2013
AS REPORTED FROM COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY, HOUSE OF REPRESENTATIVES, AS AMENDED, JUNE 25, 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," adding definitions; providing
4for payment information to interest owners for accumulation
5of proceeds from production<-, for apportionment and for
6conflicts; and making editorial changes.
12[Section 1. A lease or other such agreement conveying the
13right to remove or recover oil, natural gas or gas of any other
14designation from lessor to lessee shall not be valid if such
15lease does not guarantee the lessor at least one-eighth royalty
16of all oil, natural gas or gas of other designations removed or
17recovered from the subject real property.]
18Section 2. The act is amended by adding sections to read:
1Section 1.1. Short title.
4Section 1.2. Definitions.
8"Check stub." The financial record attached to a check.
9"Division order." An agreement signed by an interest owner
10directing the distribution of proceeds from the sale of oil,
11gas, casing head gas or other related hydrocarbons. The order
12shall direct and authorize the payor to make payment for the
13products taken in accordance with the division order.
17"Mcf." A unit of measurement expressed by 1,000 cubic feet.
18Section 1.3. Royalty guaranteed.
19A lease or other such agreement conveying the right to remove
20or recover oil, natural gas or gas of any other designation from
21the lessor to the lessee shall not be valid if the lease does
22not guarantee the lessor at least one-eighth royalty of all oil,
23natural gas or gas of other designations removed or recovered
24from the subject real property.
25Section 3. Section 2 of the act is amended to read:
26[Section 2. An oil, natural gas or other designation gas
27well or oil, natural gas or other designation gas lease which
28does not provide a one-eighth metered royalty shall be subject
29to such an escalation when its original state is altered by new
30drilling, deeper drilling, redrilling, artificial well
6An oil, natural gas or other designation gas well or oil,
7natural gas or other designation gas lease which does not
8include a one-eighth metered royalty shall be subject to an
9escalation equal to one-eighth metered royalty when its original
10state is altered by new drilling, deeper drilling, redrilling,
11artificial well stimulation, hydraulic fracturing or any other
12procedure to increase production. A lease shall not be affected
13when the well is altered through routine maintenance or
15Section 4. The act is amended by adding sections 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 such proportion as the operator
24reasonably determines to be attributable to each lease.
25Section 3.1. Commencement of guaranteed royalty.
26Whenever a procedure to increase production has been
27completed prior to the effective date of this section, metering
28and the royalty required under section 1.3 or 2 shall commence
29after December 17, 1979.
30Section 3.2. Payment information to interest owners.
1Whenever payment is made for oil or gas production to an
2interest owner, whether pursuant to a division order, lease,
3servitude or other agreement, all of the following information,
4at a minimum, shall be included on the check stub or on an
5attachment to the form of payment, unless the information is
6otherwise provided on a regular basis:
7(1) A name, number or combination of name and number
8that identifies the lease, property, unit or well or wells
9for which payment is being made; and the county in which the
10lease, property or well is located.
11(2) Month and year of gas production.
14(4) Price received per barrel, Mcf or gallon.
30Section 3.3. Accumulation of proceeds from production.
1(a) General rule.--Proceeds from production of oil and gas
2may be accumulated and remitted to the persons entitled thereto
3annually for the 12 months' accumulation of proceeds totaling
4less than $100.
5(b) Owner to be paid.--Notwithstanding any other provision
6of this section to the contrary, all accumulated proceeds shall
7be paid to the owner thereof when production ceases or upon
8relinquishment or transfer of the payment responsibility.
<-9Section 3.4. Conflicts.
10If there is any conflict between a division order and an oil
11and gas lease, the terms and conditions of the oil and gas lease
12shall control. A division order may not amend or supplement the
13terms and conditions of an oil and gas lease.
14Section 5. Section 4 of the act is amended to read:
15[Section 4. This act shall take effect in 60 days.]
16Section 4. Effective date.
17This act shall take effect in 60 days.
18Section 6. This act shall take effect in 60 days.