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Pennsylvania Adds New Royalty Payment Reporting Requirements and Deadlines for Unconventional Oil and Gas

On November 3, 2022, Pennsylvania Governor Tom Wolf signed Act 153 of 2022, which revises the Oil and Gas Lease Act’s provisions on required disclosures accompanying payments made to royalty owners from unconventional oil and gas wells. Beginning on March 3, 2023, unconventional oil and gas operators must provide production and sales information on a well-by-well basis. New reporting requirements include categorized royalty deductions with an optional summary format. If an operator does not provide the required payment information within 60 days after receipt of a written request from the royalty owner by certified mail, the owner may bring a civil action to obtain the information and to recover attorney fees and court costs.

The Act also imposes new deadlines for royalty payments and penalties for late payments. Royalty payments must be made within 120 days of the first sale of oil and gas from a well, and thereafter within 60 days after the end of the month in which production is sold. Payments that are not made on time accrue an interest penalty at the legal rate, currently 6% per annum. Payments may be suspended only if the royalty owner lacks marketable title, if there is a bona fide dispute concerning the interest, or if the owner cannot be located.

Unconventional oil and gas operators should take prompt action to review the Act and ensure that their royalty statements comply with the Act’s reporting requirements and timelines by the Act’s March 3 effective date. A full copy of the Act can be found here.

© Steptoe & Johnson PLLC. All Rights Reserved.National Law Review, Volume XII, Number 335
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About this Author

Bridget D. Furbee, Steptoe Johnson, Gas Industry Lawyer, Major Transactions Attorney
Member

Bridget Furbee focuses her practice in the area of energy law. She is the former in-house counsel for a major Fortune 500 energy company where she was responsible for legal issues related to gas exploration and production, including the development of major new geologic plays in West Virginia, Ohio, and Pennsylvania.  She has extensive experience in major transactions as well as litigation in the oil and gas industries.

(304) 933-8117
Nate Holland, Oil, Gas, Attorney, Steptoe Johnson Law Firm
Member

Nate Holland assists clients with business transactions and litigation involving the oil and gas industry. In particular, Mr. Holland helps clients develop solutions for novel challenges or new applications of oil and gas law.

(814) 333-4906
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