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PRINTER'S NO. 94
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
147
Session of
2015
INTRODUCED BY YAW, VOGEL, GREENLEAF, FONTANA, YUDICHAK,
VULAKOVICH, BROWNE, COSTA, HUGHES, SCHWANK, AUMENT, SCARNATI,
RAFFERTY AND BAKER, JANUARY 14, 2015
REFERRED TO ENVIRONMENTAL RESOURCES AND ENERGY, JANUARY 14, 2015
AN ACT
Amending the act of July 20, 1979 (P.L.183, No.60), entitled "An
act regulating the terms and conditions of certain leases
regarding natural gas and oil," further providing for
definitions, for payment information to interest owners, for
accumulation of proceeds from production and for conflicts;
and providing for joint ventures and for inspection of
records.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Sections 1.2, 3.2, 3.3 and 3.4 of the act of July
20, 1979 (P.L.183, No.60), known as the Oil and Gas Lease Act,
added July 9, 2013 (P.L.473, No.66), are amended to read:
Section 1.2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Check stub." The financial record attached to a check.
"Division order." An agreement signed by an interest owner
directing the distribution of proceeds from the sale of oil,
gas, casing head gas or other related hydrocarbons. The order
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shall direct and authorize the payor to make payment for the
products taken in accordance with the division order.
"Interest owner." A person who is legally entitled to
payment from the proceeds derived from the sale of oil or gas
from an oil or gas well located in this Commonwealth.
"Joint venture." An association or any other contractual
relationship of two or more individuals or companies engaged in
the production of an oil or natural gas well for profit without
actual partnership or incorporation.
"Lessee." A person that has obtained the right to explore,
drill, stimulate, produce, market or sell oil, gas or natural
gas liquids pursuant to an executed lease.
"Lessor." An owner of oil and gas in place that controls the
oil and gas rights and executes a lease granting the right to
explore, drill, stimulate, produce, market or sell oil, gas or
natural gas liquids.
"Mcf." A unit of measurement expressed by 1,000 cubic feet.
Section 3.2. Payment information to interest owners.
Whenever payment is made for oil or gas production to an
interest owner, whether pursuant to a division order, lease,
servitude or other agreement, all of the following information,
at a minimum, shall be included on the check stub or on an
attachment to the form of payment, unless the information is
otherwise provided on a regular basis:
(1) A unique property identification and the name,
number or combination of name and number that identifies the
lease, property, unit or well or wells for which payment is
being made; and the county in which the lease, property or
well is located.
(2) Month and year of gas production.
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(3) Total barrels of crude oil or number of Mcf of gas
or volume of natural gas liquids sold.
(4) Price received per barrel, Mcf or gallon.
(5) Total amount of severance and other production taxes
and other deductions permitted under the lease, with the
exception of windfall profit tax.
(6) Net value of total sales from the property less
taxes and deductions from paragraph (5).
(7) Interest owner's interest, expressed as a decimal or
fraction, in production from paragraph (1).
(8) Interest owner's share of the total value of sales
prior to deduction of taxes and deductions from paragraph
(5).
(9) Interest owner's share of the sales value less the
interest owner's share of taxes and deductions from paragraph
(5).
(10) Contact information, including an address and
telephone number.
Section 3.3. Accumulation of proceeds from production.
(a) General rule.--[Proceeds] Unless otherwise provided by
contract, proceeds from production of oil and gas [may be
accumulated and remitted to the persons entitled thereto
annually for the 12 months' accumulation of proceeds totaling
less than $100.] shall be paid within 60 days of production.
(a.1) Remittance.--Proceeds from production of oil and gas
may be accumulated and remitted to the persons entitled thereto
quarterly for the three months' accumulation of proceeds
totaling less than $100.
(a.2) Delinquency.--Delinquent payments under this section
shall be paid at the legal rate of interest.
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(b) Owner to be paid.--Notwithstanding any other provision
of this section to the contrary, all accumulated proceeds shall
be paid to the owner thereof when production ceases or upon
relinquishment or transfer of the payment responsibility.
Section 3.4. Conflicts.
If there is [any] a conflict between a division order and an
oil and gas lease, the terms and conditions of the oil and gas
lease shall control. A division order may not amend or
supplement the terms and conditions of an oil and gas lease.
Section 2. The act is amended by adding sections to read:
Section 3.5. Joint ventures.
In the case of a joint venture, interest owners shall be
provided the following information related to a joint venture
company on an annual basis if the joint venture company is
separately paying its share of the royalty:
(1) Name of company.
(2) Company address.
(3) Company telephone number.
(4) The proportionate share of oil or natural gas that
each joint venture markets, expressed as a decimal interest.
Section 4. Inspection of records.
(a) Authority.--A lessor or a person acting on behalf of a
lessor may inspect the supporting documentation of a lessee for
the payment information required under section 3.2 .
(b) Procedure.--
(1) A lessor or a person acting on behalf of a lessor
seeking inspection under subsection (a) must make a written
request for inspection of records for any property for which
the lessor has been paid royalties within the three-year
period immediately preceding the date of the request.
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(2) Within 30 days of receipt of the request, the lessee
shall do all of the following:
(i) Designate a location in this Commonwealth for
inspection which shall not impose an unreasonable travel
burden on the lessor or the lessor's representative.
(ii) Designate a date for inspection:
(A) as mutually agreed; or
(B) within 90 days of receipt of the request.
(iii) Designate a time for inspection which is
reasonable to permit completion of the inspection.
(iv) Provide supporting documentation of payment
information required under section 3.2. For services that
are provided by third parties , supporting documentation
shall consist of invoiced amounts for the services
provided, but shall not include the composition of the
fees charged by an unaffiliated third party.
(v) Make available a knowledgeable individual who is
able to answer questions pertaining to accounting issues
regarding a well which is the subject of the request.
(c) Confidentiality.--
(1) Except as set forth in paragraph (2), information
provided to a lessor or person acting on behalf of a lessor
that makes a request under subsection (a):
(i) shall be confidential; and
(ii) may not be disclosed to any other person.
(2) Paragraph (1) does not apply to disclosure in a
judicial proceeding.
(d) Frequency.--A request for inspection under this section
may not be made more than once in a 12-month period.
Section 3. This act shall take effect in 60 days.
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