As the debate in Harrisburg heats up this winter regarding the practice of deducting post-production costs from oil and gas royalties, the Pennsylvania Superior Court has made clear that the Guaranteed Minimum Royalty Act, or GMRA, remains a viable component of Pennsylvania oil and gas law.
In Southwestern Energy Production v. Forest Resources, 2013 PA Super. 307 (Nov. 27, 2013), the Superior Court held that an “assignment back” clause negotiated by the parties, which resulted in the lessor’s royalty being less than the statutory minimum of 12.5 percent, violated the GMRA.
