News & Analysis as of

TX Supreme Court Contract Terms Gas Royalties

McGinnis Lochridge

Tackling Free-Use and At-The-Well Royalties

McGinnis Lochridge on

This lease royalty case involved a dispute over whether the lessee was permitted to deduct volumes of gas used off the premises to power post-production activities on other gas produced from the same well. Carl v. Hilcorp...more

Troutman Pepper Locke

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

Troutman Pepper Locke 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

Gray Reed on

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

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

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

Gray Reed on

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

Gray Reed on

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

Gray Reed

Unit Operator Pays For a Problem of its Own Making

Gray Reed on

How many times must an operator suffer for a mistake in a unit declaration? Samson Exploration LLC v. T. S. Reed Properties Inc. makes it twice. (See Hooks v. Samson Lone Star for the first round). The Texas Supreme Court...more

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