Recent Texas royalty cases seem to feature litigants on the fixed royalty side trying, more often than not in vain, to escape the clutches of Van Dyke v. Navigator and Hysaw v. Dawkins. See those decisions for the history of how the Supreme Court got to where it is. (Regardless of which side you’re
If you are scoring at home, count Permico Royalties LLC v. Barron Properties, Ltd., as a win for “floating” in the fixed-or-floating royalty battles. Permico, successor to grantors in a 1937 Deed for a tract in Ward County, argued that a mineral reservation was of a ½ floating royalty interest. Barron
Rhetorical Question: When will Texas be done with fixed/floating royalty cases such as Johnson et al v. Clifton et al?
Rhetorical Answer: When scriveners of deeds that are open to eight conceivably plausible meanings have completed their remedial scrivening courses.
How did it happen?
In 1951 Young and others conveyed to Clifton and others
Co-author Ethan Wood
Coke or Pepsi? Elvis or the Beatles? Should there be a designated hitter? Fixed or floating royalty? Among the great debates of recent decades, few have proven quite as frustrating as the great “Fixed v. Floating” royalty debate in Texas jurisprudence.
A royalty can be conveyed or reserved in two ways: as a fixed fraction of total production (fractional royalty interest) or as a fraction of the total royalty interest (fraction of royalty interest). The fractional interest is “fixed” because it is untethered to the royalty in a particular oil and gas lease. A fraction of royalty is “floating” because it varies depending on the royalty in the lease.
Continue Reading Texas Supreme Court Decides Another Fixed-or-Floating Royalty Case