Consider this while celebrating the resurrection of Big Tex: When a lease prohibits post-production cost deductions, can a lessee deduct those costs from a lessor’s royalty? Yes, says Potts v. Chesapeake Exploration, L.L.C. In a market value lease, where lessee sells the gas “at the well” and the court applies the netback approach to calculating
Ambiguity Sends an Overriding Royalty Dispute Back to the Trial Court
Co-author Bill Drabble
It must be maddening to non-lawyers that a large segment of an industry can operate in harmony by agreeing that a contract in widespread use means one thing, only to have party-crashers decide it means another. Total E & P U.S.A., Inc. v. Kerr-McGee Oil & Gas Corp. et al arose out
Expert Testimony Rejected in Royalty Case
If you are involved in a royalty case, or plan to be, read Occidental Permian, Ltd. v. French et al. The appellate court decided there was no evidence to support the trial court’s findings that the lessors were underpaid. (See my too-long December 6 post for the underlying facts.) In this case the plaintiffs were
Underpaid Royalty Case Resolved in Favor of Lessee
One impediment to the correct resolution of lessors’ claims for unpaid royalties is the complexity of the contractual arrangements between producers and purchasers of production. Occidental Permian, Ltd. v. French et al offers a good example.
It is also a refresher on the basic rules of royalty calculation in Texas and, for royalty owners in
Texas Royalty Owners Beware
Remember the Wilford Brimley character in The Firm? “I get paid to be suspicious when I’ve got nothing to be suspicious about.” Shell Oil Company v. Ross commands you to think like Mr. Brimley. If you suspect your lessee is not paying proper royalties, do not wait to investigate. Even if you don’t suspect anything
The “single business enterprise” doctrine is alive and well in Louisiana
A lessee, operator, and contract driller were found to be a “single business enterprise” for the purpose of imposing statutory penalties and attorney fees for failure to pay royalties. The principle is that if one corporation is wholly under the control of another, the fact is it is a separate entity does not relieve the