Bill Text: PA SB259 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: 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," adding definitions; providing for payment information to interest owners for accumulation of proceeds from production, for apportionment and for conflicts; and making editorial changes.

Spectrum: Moderate Partisan Bill (Republican 9-2)

Status: (Passed) 2013-07-09 - Act No. 66 [SB259 Detail]

Download: Pennsylvania-2013-SB259-Amended.html

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PRIOR PRINTER'S NO. 181

PRINTER'S NO. 341

 

THE GENERAL ASSEMBLY OF PENNSYLVANIA

 

SENATE BILL

No.

259

Session of 2013

 

 

 

INTRODUCED BY YAW, BAKER, FONTANA, RAFFERTY, FOLMER, VOGEL, WAUGH, BROWNE, McILHINNEY AND VULAKOVICH, JANUARY 18, 2013

 

 

AS AMENDED ON THIRD CONSIDERATION, FEBRUARY 4, 2013

 

 

 

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

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

Section 1. Section 1 of 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certain leases regarding natural gas and oil," is repealed:

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

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

Section 1.1. Short title.

This act shall be known and may be cited as the Oil and Gas

Lease Act.

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 
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.

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

Section 1.3. Royalty guaranteed.

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

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

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

well is altered through routine maintenance or cleaning.]

Section 2. Escalation required for alteration to original
state.

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

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

Section 3.1. Commencement of guaranteed royalty.

Whenever a procedure to increase production has been
completed prior to the effective date of this section, metering
and the royalty required under section 1.3 or 2 shall commence
<-within 90 days after the effective date of this section after 
December 17, 1979.

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 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.

(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 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.

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

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

Section 4. Effective date.

This act shall take effect in 60 days.

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