News & Analysis as of

TX Supreme Court Mineral Leases Gas Royalties

Oliva Gibbs LLP

Muscled Out While “Muscling In”: The Role of Actual Drainage in MIPA

Oliva Gibbs LLP on

In Ammonite Oil & Gas Corp. v. R.R. Comm’n of Tex., the Texas Supreme Court held that the Railroad Commission (the “RRC”) did not abuse its discretion in denying a “muscle in” application under the Texas Mineral Interest...more

Gray Reed

No Compound Interest on Unpaid Royalties Under Texas Oil and Gas Lease

Gray Reed on

It’s not exactly Deuteronomy 23:19, but the Supreme Court of Texas has an opinion about interest. They don’t like it if it’s compounded. Samson Exploration LLC v. Bordages addressed interest to be charged on unpaid royalties...more

Porter Hedges LLP

Wellbore Transactions Update - Conveyances, Reservations And Related Lease Severance Issues

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This article focuses on the state of Texas law regarding wellbore rights and various related issues raised by transactions involving such rights (and other similar lease severance issues) and provides some practical tips to...more

White & Case LLP

Implications of the Texas Supreme Court and the Fifth Circuit Court of Appeals Ruling on Fuel Gas Royalties

White & Case LLP on

On June 4, 2024, the United States Court of Appeals for the Fifth Circuit affirmed the dismissal of an "at the well" royalty holder's class action lawsuit after the Texas Supreme Court held that Hilcorp Energy Co. properly...more

Locke Lord LLP

The Texas Supreme Court Holds Interest Must Be Simple Absent an Express, Clear, and Specific Provision for Compounding

Locke Lord LLP on

The Texas Supreme Court has clarified Texas law concerning how to calculate interest that is being paid pursuant to an agreement or statute. Samson Exploration, LLC v. Bordages, No. 22-0215, 2024 WL 2869049 (Tex. June 7,...more

Houston Harbaugh, P.C.

Texas Supreme Court Addresses Fuel Gas Question

Many oil and gas leases across Pennsylvania allow the driller to divert and use volumes of raw gas to power and fuel production operations both on and off the leasehold. Is a driller obligated to pay a royalty on that volume...more

Gray Reed

Supreme Court of Texas Decides Another Post-Production Cost Dispute

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In Carl v. Hillcorp Energy the Supreme Court of Texas addressed the relationship between the lessee’s use of gas off-premises under a free-use clause and the lessor’s burden to share post-production costs (PPCs) under the...more

Houston Harbaugh, P.C.

Texas Supreme Court to Address the Obligation to Calculate Royalty on Gas Used to Fuel Off-Lease Operations

Houston Harbaugh, P.C. on

Let’s assume you own 165 acres in Tioga County. In 2019, you sign a new oil and gas lease with ABC Drilling. You negotiate an 18% net royalty. The royalty clause, however, requires ABC Drilling to calculate the royalty on...more

Oliva Gibbs LLP

Flipping the Switch on Disputed Gas Royalty Payments: On Lease v. Off Lease

Oliva Gibbs LLP on

I. Introduction - The dispute over a lessee’s obligation to pay royalty amounts for gas used off-premises continues as the Fifth Circuit certified two questions to the Texas Supreme Court last month. At issue, is whether...more

Gray Reed

Texas Supreme Court Rules on Suspension of Proceeds of Oil and Gas Production

Gray Reed on

Freeeport-McMoRan Oil and Gas, LLC and Ovintiv USA Inc. v. 1776 Energy Partners LLC  presented a recurring question faced by Texas oil and gas producers:  When can proceeds of production be withheld by the operator without...more

Gray Reed

Texas Supreme Court Clarifies Postproduction Cost Decision

Gray Reed on

It was jurisprudential Groundhog Day as the Supreme Court of Texas handed down Nettye Engler Energy v. Bluestone Natural Resources, another in a series of postproduction cost disputes, only two days after Puxsutawney Phil...more

Gray Reed

Tax Foreclosure on Royalty Did Not Include Possibility of Reverter

Gray Reed on

Ridgefield Permian, LLC, et al. v. Diamondback E & P LLC, et al. addresses the scope of a property interest foreclosed upon by a tax suit in Reeves County, Texas. In this post we will shortcut the complicated facts and...more

Gray Reed

Texas Supreme Court Weighs in on Post-Production Costs

Gray Reed on

The Supreme Court of Texas has ruled that oil and gas leases under consideration in BlueStone Natural Resources II, LLC v. Walker Murray Randle, et al. did not permit deduction of postproduction costs from sales proceeds...more

Skadden, Arps, Slate, Meagher & Flom LLP

Supreme Court of Texas Clarifies Allocation of Post-Production Costs in Oil and Gas Royalties in BlueStone Natural Resources II,...

On March 12, 2021, the Supreme Court of Texas issued a unanimous opinion that clarifies when a lessee is entitled to deduct post-production costs from royalties paid to the lessor under oil and gas leases. Construing a lease...more

Gray Reed

Surrounding Circumstances Don’t Always Inform Deed Construction

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Here we continue our discussion of the Texas Supreme Court’s opinion in Piranha Partners et al. v. Joe B. Neuhoff et al. determining that an assignment of an overriding royalty in minerals unambiguously conveyed the override...more

Gray Reed

Texas Supreme Court Rejects “Rigid Rules” of Deed Construction

Gray Reed on

The question for the Texas Supreme Court in Piranha Partners et al. v. Joe B. Neuhoff et al. was whether an assignment of an overriding royalty in minerals conveyed the override only in production from the identified well...more

Womble Bond Dickinson

WIPEOUT!: Common Language in “Anti-Washout” Provision Violates the Rule Against Perpetuities

Womble Bond Dickinson on

In Yowell v. Granite Operating Co . 557 S.W.3d 794 (Tex. App.—Amarillo 2018, pet. granted), the Texas Court of Appeals for the Seventh District in Amarillo affirmed the trial court’s determination that an “anti-washout”...more

Gray Reed

Texas Supreme Court Decides Another Fixed-or-Floating Royalty Case

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Coke or Pepsi? Elvis or the Beatles? Left Twix or Right Twix? 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...more

Jackson Walker

The Double-Fraction Dilemma: Intent-Focused Inquiry Prevails

Jackson Walker on

As the oil and gas industry has moved away from the legacy of the 1/8th royalty, double-fraction language has generated a multitude of disagreements as to whether a royalty interest should be construed as "fixed" or...more

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