This lease rider form may be used when you are involved in a lease transaction, and have made the decision to utilize the form of Oil and Gas Lease presented to you by the Lessee, and you want to include additional provisions to that Lease form to address specific concerns you may have, or place limitations on the rights granted the Lessee in the “standard” lease form.
Pennsylvania Minimum Royalty Payments, also known as minimum royalty rates, are legally mandated payments made by natural gas companies to landowners in Pennsylvania for extracting natural gas resources from their properties. These payments ensure that landowners receive a fair share of the profits generated from gas exploration and production activities. In Pennsylvania, there are different types of Minimum Royalty Payments that can be established based on various factors, including lease agreements and production volumes. Here are three major types: 1. Statutory Minimum Royalty Payments: The Pennsylvania General Assembly established a minimum royalty payment under the Guaranteed Minimum Royalty Act, also known as Act 60, in 1979. According to this law, gas companies are required to pay a minimum 12.5% royalty rate on gross proceeds from the sale of natural gas extracted from the leased property. This statutory minimum ensures that landowners receive a fair share irrespective of lease terms negotiated. 2. Lease-Specific Minimum Royalty Payments: In some lease agreements, landowners and gas companies negotiate specific minimum royalty payment terms above the statutory minimum. These lease-specific minimum payments can be higher than the statutory requirement and are tailored to individual contracts. Landowners are advised to carefully review their lease agreements to understand the specific minimum royalty payments they are entitled to receive. 3. Production Volume-Based Minimum Royalty Payments: Some royalty agreements may include provisions for minimum royalty payments based on the total gas production volume. These provisions ensure landowners receive a minimum payment threshold even if the actual royalties based on a percentage of sales revenue do not reach a certain level. This type of minimum royalty payment protects landowners from low production volumes or market fluctuations that may otherwise diminish their royalties. Pennsylvania Minimum Royalty Payments serve to protect landowners' interests by guaranteeing they receive a fair share of the value created by natural gas extraction activities. These payments aim to compensate landowners for the use and exploitation of their property while promoting equitable partnerships between gas companies and landowners. Landowners should be aware of their rights and consult legal professionals to ensure they receive the minimum royalties they are entitled to based on their specific lease agreements.
