Senate Bill 259 (Yaw-R-Lycoming) requiring natural gas companies operating in Pennsylvania to standardize all deductions on royalty check payment stubs has passed both chambers of the General Assembly and now heads to Gov. Corbett’s desk, according to bill sponsor Sen. Gene Yaw (R-Lycoming), Majority Chair of the Senate Environmental Resources and Energy Committee.

Senate Bill 259 would require companies producing natural gas to show on each royalty check stub, attachment to a payment form, or other remittance advice a detailed itemization of all royalty deductions from royalties paid to a leaseholder.

“Senate Bill 259 provides a simple, transparent way for subsurface owners who presently receive royalty payments from natural gas companies to verify that royalty payments received are being made properly,” Sen. Yaw said. “This measure mirrors what is seen in other natural gas producing states and provides specificity to those recipients on natural gas royalties.”

Currently, the state of Pennsylvania does not require gas companies to list deductions in any standardized form from royalties paid to a landowner.

The division order would include 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; the county in which the lease, property or well is located; the month and year of gas production; total barrels of crude oil or number of MCF of gas or volume of natural gas liquids sold; price received per barrel, MCF or gallon; total amount of severance and other production taxes and other deductions permitted under the lease, with the exception of the windfall profit tax; the net value of total sales after deductions; the owners’ interest in sales from the lease, property, or well expressed as a decimal or fraction; interest owners’ share of the total value of sales prior to deductions; interest owners’ share of the sales value less the interest owners’ share of taxes and deductions; and contact information, including an address and telephone number.

Additionally, an amendment offered in the House added a provision relating to horizontal drilling on private lands already leased, a provision directed to reducing the number of well pads in order to lessen environmental impacts.

“Recently, the Senate Environmental Resources and Energy Committee held a public hearing related to royalty stub transparency issues and the deduction of post production costs,” Sen. Yaw added.  “The hearing provided an honest dialogue and I look forward to continuing the discussion on these important issues.  There is much more we need to accomplish.  I commend my colleagues in the House and Senate for seeing the need for this legislation and supporting its passage.”

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7/8/2013