ROYALTY ON SWEET GAS OR SOUR GAS? THE SUPREME COURT OF PENNSYLVANIA’S INTERPRETATION OF THE GUARANTEED MINIMUM ROYALTY ACT TO PERMIT GAS COMPANIES TO DEDUCT POST-PRODUCTION COSTS FROM ROYALTY PAYMENTS MADE TO LANDOWNERS: KILMER V. ELEXCO LAND SERVICES, INC.

BENJAMIN F. HANTZ

The exponential growth in interest in Pennsylvania‘s Marcellus Shale deposits caused many landowners to challenge the validity of their leases under Pennsylvania‘s Guaranteed Minimum Royalty Act. The central issue in deciding whether the leases were valid was whether gas companies were permitted to deduct certain post-production costs from royalty payments made to landowners.
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