Two states, one formation, opposite law. Pennsylvania lets operators deduct post production costs. West Virginia does not. If you own on both sides of that line you own two different assets, and almost nobody in this business will tell you so.
The Marcellus is the largest natural gas field in the United States and the two states that share it took opposite positions on the single question that most affects a royalty owner's income. Nobody selling to Marcellus owners writes about it.
Berlin buys Marcellus and Utica royalties and minerals in Pennsylvania and West Virginia. We are a Tulsa company. We are not going to invent a Canonsburg address, and it does not appear to matter to anyone: the companies currently ranking for these searches are almost all single office operations in Fort Worth. What matters is whether the buyer reads your lease against the law of your state.
The Guaranteed Minimum Royalty Act, 58 P.S. section 33, requires a lease to guarantee at least a one eighth royalty. Owners read that as a floor on the check. It is not, quite.
In Kilmer v. Elexco Land Services, Inc., 605 Pa. 413, 990 A.2d 1147 (2010), the Pennsylvania Supreme Court held unanimously that the Act permits royalty to be calculated at the wellhead using the net back method. The downstream sale price is reduced by gathering, compression, processing, and transportation before the one eighth is applied. A check can therefore be less than one eighth of what the gas actually sold for and still comply with the statute.
There is a countervailing line at the margins. SWN Production Co. v. Forest Resources, 2013 PA Super 307, held a lease structure whose net royalty falls below one eighth can violate the Act. But the working rule for a Pennsylvania owner is that deductions are lawful, and your lease decides how far they go.
Three cases build the West Virginia rule.
Wellman v. Energy Resources, Inc., 210 W. Va. 200 (2001), placed the cost of reaching a marketable condition on the lessee.
Estate of Tawney v. Columbia Natural Resources, LLC, 219 W. Va. 266, 633 S.E.2d 22 (2006), added the three part test: a clause allocating post production costs to the lessor must expressly provide for it, identify the specific deductions with particularity, and state the method of calculation. Language such as "at the wellhead," standing alone, is ambiguous and fails. A great many leases fail.
Romeo v. Antero Resources Corp., No. 23-589 (W. Va. June 11, 2025), extended the rule to the point of sale and to natural gas liquids, holding a producer may not deduct a proportionate share of the costs of processing, fractionating, and transporting residue gas and NGLs to the point of sale. Both leases at issue were silent on post production costs, so no deductions were permitted. There was a vigorous dissent urging that Tawney be overruled, so this is live law rather than settled forever.
Two Marcellus royalties producing identical gas can be worth materially different amounts because of which state they are in and what the lease says. Any buyer who has not asked to see your lease is not valuing your interest; they are pricing your last check.
We will show you the arithmetic both ways, including what the interest is worth if the deductions on your current statement are not actually permitted. Our royalty statement decoder explains the line items, and our letter templates include a certified mail demand for an itemized accounting.
Before anything else in Pennsylvania: check what the deed actually says.
Under the Dunham Rule, a Pennsylvania deed granting or reserving "minerals" without naming oil or natural gas is presumed not to include them. Dunham v. Kirkpatrick, 101 Pa. 36 (1882), reaffirmed in Butler v. Charles Powers Estate, 65 A.3d 885 (Pa. 2013). The presumption is rebuttable only by clear and convincing evidence.
Families who have believed for four generations that great grandfather kept the gas may own nothing. Surface owners who assumed the gas was gone may own all of it. We read Pennsylvania deeds free, whether or not you sell to us. Send one to Ask a Landman or text a photo to 918-984-1645.
West Virginia solved fragmentation in 2018 with the Cotenancy Modernization and Majority Protection Act, W. Va. Code chapter 37B. Cotenants owning at least three fourths may authorize development. A nonconsenting cotenant has 45 days to elect a pro rata production royalty on gross proceeds at first point of sale, free of post production expenses, at the highest rate paid to any consenting cotenant, or participation at 200 percent cost recovery. Failure to elect defaults to the royalty, which is usually the better outcome. Unknown owners are deemed to elect it and their funds go to the State Treasurer.
Pennsylvania has no compulsory pooling for the Marcellus. The limited pooling authority under the Oil and Gas Conservation Law does not reach the shale. Act 66 of 2013 does let an operator integrate contiguous leaseholds for horizontal development unless a lease expressly prohibits it. If you are unleased in Pennsylvania you generally cannot be forced in, and you generally get nothing.
This is the value that gets left on the table most often.
Across much of southwest Pennsylvania and northern West Virginia, the Utica and Point Pleasant sit beneath producing Marcellus acreage, frequently covered by the same lease covering all depths. Utica development in these areas is far behind Ohio's.
An offer computed as a multiple of your current Marcellus check assigns that inventory a value of zero. It is not zero. When we underwrite Appalachian minerals, undeveloped deeper rights are an explicit line item and we show you what we put on it and why.
See the Utica basin page for how that play is developing next door.
Last reviewed August 2026. West Virginia post production cost law is actively litigated. Berlin Royalties is a mineral buyer and a landman shop in Tulsa, not a law firm or a tax advisor, and this page is general information rather than legal advice about your lease or your deed.
Northeast Pennsylvania, principally Susquehanna and Bradford, produces some of the highest rate dry gas wells in North America with very low liquids content and correspondingly simple royalty math.
Southwest Pennsylvania and northern West Virginia produce liquids rich gas that must be processed. This is exactly where the post production cost fight lives, and where the state line matters most.
Deeper and lightly drilled beneath much Marcellus acreage in both states, usually covered by the same lease. Undeveloped Utica rights are real value that offers based on your current check ignore completely.
Century old shallow production stacked above the Marcellus, and the old leases and flat rate instruments that came with it.
The northeast Pennsylvania dry gas counties, the southwest Pennsylvania wet gas counties, and the north central West Virginia counties are where we concentrate.
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