Texas Supreme Court Rules on Post_Production Costs
Interesting to Texas Royalty owners and Oil/Gas Producers.
I might need some of your knowledge on what this means.
To the relief of oil and gas producers, the Texas Supreme Court ruled on March 1, 2019, in Burlington Resources Oil & Gas Company, L.P. v. Texas Crude Energy, LLC (No. 17-0266), that post-production costs were rightfully deducted when calculating overriding royalty payments based on the "amount realized" from the sale when the royalty interest is to be delivered "into the pipelines, tanks, or other receptacles with which the wells may be connected." This ruling reversed the judgment of the court of appeals that found that "[e]ven assuming that, under the granting clause, the [royalty] is generally to be delivered 'at the well,' the parties are still free to allocate post-production costs as they see fit." The Court noted that the court of appeals misunderstood its decision in Chesapeake Exploration, L.L.C. v. Hyder, 483 S.W.3d 870 (Tex. 2016), and that it "never construed a contractual 'amount realized' valuation method to trump a contractual 'at the well' valuation point."
https://www.jdsupra.com/legalnews/texas-supreme-court-expands-upon-...
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Replies to This Discussion
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Permalink Reply by Mister Sunday on
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I don't know. It just feels like I sold you my cattle, then you get to charge me for having to butcher it to sell the beef.
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Permalink Reply by Mister Sunday on
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And had I said "No, I don't like that deal" they would've still taken it out of the ground underneath me. I'm just curious as to why I pay for all that when they take it from me, and then I have to pay for it again when I use it.
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Permalink Reply by JHH on
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Saw this the other day.
jack
NARO is the only national organization representing, solely and without compromise, oil and gas royalty owners' interests.
CALL TO ACTION!
We Need Your Help Now!!!
NARO members, we need your help opposing HB 3372.
A vote in the Texas House is imminent! Let the Representatives on the House Calendars Committee know this legislation is harmful to royalty owners!!Here a link to the Calendar Committee members:
https://house.texas.gov/committees/committee/?committee=C050
HB 3372 takes away your contract rights!
HB 3372 is a bill filed by Rep. Tom Craddick that will remove your right to sue an operator for breach of contract for withholding royalty payments due to a title dispute. This bill will limit you to suing under the division order statute to recover royalty payments being withheld due to a title dispute, regardless of what you negotiated in your oil and gas lease. Many owners have seen payments withheld for flimsy reasons, and you should have the right to require more in your lease!HB 3372 takes away your contract rights!
Call or email members of the House Calendars Committee and tell them to vote NO on HB 3372!
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