Title: Exxon Mobil Corp. v. Wyo. Dep't of Revenue

State: wyoming

Issuer: Wyoming Supreme Court

Document:

EXXON MOBIL CORPORATION v. WYOMING DEPARTMENT OF REVENUE; STATE OF WYOMING, through WYOMING DEPARTMENT OF REVENUE v. EXXON MOBIL CORPORATION2011 WY 161Case Number: S-11-0047, S-11-0048Decided: 12/09/2011NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so correction may be made before final publication in the permanent volume.
OCTOBER 
TERM, A.D. 2011

EXXON 
MOBIL CORPORATION,Appellant (Petitioner),v.WYOMING 
DEPARTMENT OF REVENUE,Appellee (Respondent).STATE OF WYOMING, 
through WYOMING DEPARTMENT OF REVENUE,Appellant 
(Cross-Petitioner),v.EXXON MOBIL CORPORATION,Appellee 
(Cross-Respondent).
 
Rule 
12.09(b) Certification from the District Court of Sublette 
County
The 
Honorable Marvin L. Tyler, Judge
 
Representing 
Exxon Mobil Corporation:
Lawrence 
J. Wolfe, P.C. and Patrick R. Day, P.C., Holland & Hart LLP, Cheyenne, 
Wyoming; Brent R. Kunz, Hathaway & Kunz, P.C., Cheyenne, Wyoming.  Argument by Mr. 
Day.
 
Representing 
Wyoming Department of Revenue:
Gregory 
A. Phillips, Wyoming Attorney General; Michael L. Hubbard, Deputy Attorney 
General; Martin L. Hardsocg, Senior Assistant Attorney General.  Argument by Mr. 
Hardsocg.
 
Before 
GOLDEN, HILL, VOIGT, and BURKE, JJ., and CRANFILL, 
D.J.
 
CRANFILL, 
District Judge.
 
[¶1]      This case arrives 
before the Court once again from a decision rendered by the State Board of 
Equalization (“Board”) concerning the valuation point for tax purposes of the 
natural gas production from the LaBarge Field in Sublette County.  Previously, in Exxon Mobil Corp. v. State of Wyo., Dep’t of 
Revenue, 2009 WY 139, 219 P.3d 128 (Wyo. 2009), this Court interpreted the 
terms “initial dehydrator” and “processing facility” and analyzed the 
proportionate profits valuation method.  
The Court, however, remanded one issue to the Board: specifically, 
whether the meters located at the LaBarge Field well sites were “custody 
transfer meters” as defined by Wyo. Stat. Ann. § 39-14-203(b)(iv)1 or volume meters for Exxon’s share 
of gas production.  The Board held 
that the meters were not custody transfer meters for Exxon’s share of gas 
production because Exxon did not actually transfer its gas to another entity at 
the meters.  The Board further held 
that the same meters were custody transfer meters for the gas produced by two 
other working interest owners, Howell Petroleum Company (“Howell”) and Yates 
Petroleum Corporation (“Yates”).  
Howell and Yates were not parties to the action.  
 
[¶2]      Both Exxon and 
the State of Wyoming, Department of Revenue (“Department”) appealed the Board’s 
decision to the district court, Exxon appealing in S-11-0047 and the Department 
appealing in S-11-0048.  Pursuant to 
W.R.A.P. 12.09(b), the district court certified the cases directly to us for 
review.  The Court consolidated the 
two appeals for decision.  We will 
affirm the Board’s determination that the meters were not custody transfer 
meters for Exxon’s gas, but reverse the Board’s determination that the meters 
were custody transfer meters for Howell’s and Yates’ gas.
 
ISSUES
 
[¶3]      Exxon states the 
issues as follows:
 
1.    
Did 
the State Board of Equalization err in its application of the statutory term 
“custody transfer meter” to value ExxonMobil’s natural gas 
production?
 
2.    
Did 
the State Board of Equalization err when it held that working interest owners 
Howell and Yates deliver their LaBarge natural gas stream to ExxonMobil through 
“custody transfer meters” at the wells, as that term is used in Wyo. Stat. § 
39-14-203(b)(iv)?
 
The 
Department identifies similar issues, albeit phrased 
differently:
 
1.    
Did 
the State Board have authority to rule on the point of valuation for natural gas 
owned by two entities, not parties to the State Board’s proceedings - Howell 
Petroleum Corporation and Yates Petroleum Corporation (and their 
successors)?
 
2.    
If 
so, did the State Board correctly determine that the allocation meters were 
“custody transfer meters” for Howell Petroleum Corporation’s and Yates Petroleum 
Corporation’s 2005 gas production?
 
3.    
Did 
the State Board of Equalization correctly determine that because Exxon Mobil 
Corporation did not transfer custody or control of its LaBarge gas production at 
well site meters, the meters were not “custody transfer meters” for determining 
the taxable point of valuation for Exxon’s gas production in accordance with 
WYO. STAT. ANN. § 39-14-203(b)(iv)?
 
4.    
Because 
it was admitted that Exxon Mobil Corporation did not transfer its LaBarge gas at 
the meters in question, did the State Board of Equalization correctly reject 
Exxon’s attempt to adopt, for its own gas, the point of valuation it imputed to 
another taxpayer’s gas interest?
 
FACTS
 
[¶4]      The facts in this 
case are essentially undisputed.  
This Court will therefore rely largely on paraphrases of and quotations 
from the Board’s Findings of Fact.  
The Court commends the Board for providing a comprehensive and detailed 
factual background.
 
[¶5]      Exxon operates 
three federal natural gas units, Fogarty Creek Unit, Lake Ridge Unit and 
Graphite Unit.  These units 
constitute the LaBarge Field in the Bridger-Teton National Forest in Sublette 
County, Wyoming.  Exxon is the sole 
lessee of the federal leases in the Lake Ridge and Graphite Units and therefore 
owns all of the unitized substances in these units.  There are, however, other leaseholders 
in the Fogarty Creek Unit.  
Specifically, Howell and Yates, or their successors in interest,2 own seven percent (7%) of all 
unitized substances in the Fogarty Creek Unit.   Howell’s and Yates’ seven percent 
(7%) interest in the Fogarty Creek Unit accounts for five percent (5%) of total 
production from all three units combined.  

 
[¶6]      Exxon produces 
LaBarge sour gas from eighteen (18) wells.  
Each well site has a “well building” that contains equipment to assist in 
production and movement of the gas from the wellhead downstream.  Near the wellheads are meters that 
measure gas volumes.  

 
[¶7]      Each unit is 
governed by a unit operating agreement which identifies the “operator” for all 
production within the unit, and defines how each unit will be developed.  Exxon is the operator for all three 
units.  The unit operating agreement 
designates the rights and responsibilities of the unit operator and working 
interest owners.  The unit operating 
agreement for the Fogarty Creek Unit requires Howell and Yates to either take 
their gas in kind or separately dispose of it.  The agreement further states that should 
Howell or Yates not take their gas in kind or separately dispose of it their gas 
will be “banked.”  In other words, 
Howell’s and Yates’ respective shares of gas are left in the ground and 
one-hundred percent (100%) of production is attributed to Exxon until Howell and 
Yates can take their gas in kind or separately dispose of it through a 
processing agreement or otherwise.  

 
[¶8]      Further 
downstream from the units is the Shute Creek processing facility, which was 
first constructed in 1984.  At the 
time the Shute Creek plant was constructed, Exxon offered Howell and Yates the 
opportunity to acquire ownership interest in the plant.  Howell and Yates declined to exercise 
any ownership interest in the facilities constructed downstream of the LaBarge 
Field.  However, because Howell’s 
and Yates’ shares of the gas would have to be processed at the Shute Creek 
facility the parties attempted to negotiate a processing agreement for Howell’s 
and Yates’ share of the gas.  After 
negotiations reached an impasse, Howell and Yates filed an antitrust lawsuit 
against Exxon.
 
[¶9]      The antitrust 
litigation was resolved by the parties negotiating a complex processing 
agreement, referred to as the “Howell and Yates Agreements.” The basic term of 
the agreement was that Exxon would process Howell’s and Yates’ share of gas from 
the Fogarty Creek Unit in exchange for Howell and Yates paying Exxon a fee equal 
to sixty-five percent (65%) of the gross revenues received from the sale of 
their shares of production.  

 
[¶10]   Exxon exclusively owns all 
facilities downstream of the wing valve on the wellhead including the gathering 
lines, manifolds, Black Canyon facility, the pipeline from Black Canyon to Shute 
Creek, and Shute Creek.  All the 
cost for facilities after the wing valve are incurred by Exxon, which is 
compensated for the costs of owning and operating these facilities for the 
benefit of the other working interests owners by the terms of the Howell and 
Yates Agreements.  

 
[¶11]   Article 7.1 of the Howell and Yates 
Agreements provides that possession, custody and control of Howell’s and Yates’ 
gas is transferred to Exxon for processing immediately downstream of the wing 
valve on the wells, as measured by the meters located at each well.  Accordingly, Exxon takes custody of, but 
not title to, the raw gas at the wing valve and meters.  Title to the gas remains with the 
working interest owner, however.
 
[¶12]   Each Fogarty Creek Unit well has 
multiple “working interest” owners.3  Despite the fact that Fogarty Creek is 
unitized, each well has a slightly different working interest ownership because 
of the parties who are “nonconsents,”4 and because the wells were 
originally drilled in a manner inconsistent with the federal unit drilling 
blocks.  Exxon must therefore 
perform an exact accounting for each Fogarty Creek well separately to determine 
what percentage ownership in each well is attributable to Exxon and the other 
working interest owners.  The meters 
at the wells are used to measure this production and to properly account for the 
working interest and royalty ownership of the gas.  Although Exxon owns the entire working 
interest in the Lake Ridge and Graphite Units, each well must be individually 
metered since the gas from all three units is combined for processing through 
common facilities downstream.  The 
total production for the LaBarge Field is allocated to working interest owners 
based on each individual well.  In 
order to properly calculate one working interest owner’s share of production in 
a Fogarty Creek well, Exxon must know the amount of production of all the 
LaBarge Field wells.  The Bureau of 
Land Management Minerals Management Service (“MMS”) also requires individual 
meters at each well in all of the LaBarge Field units. 
 
[¶13]   The matters giving rise to the 
instant litigation commenced in 2006 when Exxon filed its annual gross products 
return with the Department reporting its 2005 natural gas production from the 
LaBarge Field.  The Department 
declined to accept Exxon’s reported values for the 2005 LaBarge Field 
production.  Disputes concerning the 
taxation of LaBarge Field gas were previously addressed by this Court in RME Petroleum Co. v. Wyo. Dep’t of 
Revenue, 2007 WY 16, 150 P.3d 673 (Wyo. 2007); Wyo. Dep’t of Revenue v. Exxon Mobil 
Corp., 2007 WY 112, 162 P.3d 515 (Wyo. 2007); and Exxon, 2009 WY 139, 219 P.3d 128.  In the most recent opinion, the Court 
remanded one issue to the Board “to determine the correct point of valuation in 
accordance with this opinion” in the context of whether the meters at the wells 
were custody transfer or volume meters. Exxon, ¶ 52, 219 P.3d  at 143.  Exxon argued that the meters at the 
wells were custody transfer meters, and hence the correct point of valuation for 
its share of gas.  Conversely, the 
Department argued the meters were not custody transfer meters and that the 
statutory point of valuation for tax purposes for all gas produced in the 
LaBarge field is the inlet of Black Canyon.  The Board determined that the meters 
were not custody transfer meters for gas owned by Exxon because Exxon did not 
actually transfer control or charge its gas to another entity at the 
meters.  However, the Board 
determined that the same meters were custody transfer meters for gas owned by 
Howell and Yates because pursuant to the Howell and Yates Agreements 
responsibility for the working interest owners’ gas is transferred to Exxon at 
the meters. 
 
STANDARD 
OF REVIEW
 
[¶14]   Our review of an administrative 
agency’s decision is governed by the Wyoming Administrative Procedure Act, 
which, in pertinent part, provides that the reviewing court 
shall:
 
(ii) 
Hold unlawful and set aside agency action, findings and conclusions found to 
be:   
(A)               
Arbitrary, 
capricious, an abuse of discretion or otherwise not in accordance with 
law;
(B)               
Contrary 
to constitutional right, power, privilege or immunity;
(C)               
In 
excess of statutory jurisdiction, authority or limitations or lacking statutory 
right;
(D)               
Without 
observance of procedure required by law; or
(E)               
Unsupported 
by substantial evidence in a case reviewed on the record of an agency hearing 
provided by statute.
 
Wyo. 
Stat. Ann. § 16-3-114(c)(ii).  

 
[¶15]   We affirm an agency’s findings of 
fact if they are supported by substantial evidence.  Dale v. S & S Builders, LLC, 2008 WY 
84, ¶ 22, 188 P.3d 554, 561 (Wyo. 2008).  
We review an agency’s conclusion of law de novo.  Id., ¶ 26, 188 P.3d  at 561.   To summarize, administrative 
agency action must be set aside only when the agency has: 
 
(1) 
acted arbitrarily; (2) acted capriciously; (3) acted contrary to law; (4) abused 
its discretion; (5) violated a constitution; (6) acted beyond its statutory 
authority; (7) failed to observe legally required procedures; or (8) made 
findings or reached conclusions unsupported by substantial evidence. 

 
Northfork 
Citizens For Responsible Dev. v. Bd. of County Comm’rs of Park 
County, 
2010 WY 41, ¶ 17, 228 P.3d 838, 845 (Wyo. 2010).
 
DISCUSSION
 
I.              
Exxon’s 
Point of Valuation - Are the meters custody transfer meters for Exxon’s share of 
gas?
 
[¶16]   When this case was most recently 
before the Court we remanded one issue to the Board to determine the proper tax 
valuation point for Exxon’s LaBarge Field gas.  The Court summarized and remanded with 
the following directive:
 
            
ExxonMobil urges us to choose among these three options [for its tax 
valuation point].5 [Exxon] asserts that there is a 
custody transfer meter located at each wellhead, so the proper point of 
valuation is at the inlet to these custody transfer meters.  The record before us, however, does not 
establish with sufficient certainty whether these meters are custody transfer 
meters or volume meters.  If they 
are volume meters, they are not the proper points of valuation.  See Amoco Prod. Co., ¶ 31, 94 P.3d  at 
443.  We are unable to resolve this 
issue based on the record before us, and will remand this case to the Board to 
determine the correct point of valuation in accordance with this 
opinion.
 
Exxon, 
¶ 52, 219 P.3d  at 143-144 (footnote added.)  
 
[¶17]   This Court has previously 
interpreted the term “custody transfer meter,” as found in Wyo. Stat. Ann. § 
39-14-203(b)(iv), in Amoco Prod. Co. v. 
Dep’t of Revenue, 2004 WY  89, 
¶¶ 34-35, 94 P.3d 430, 444 (Wyo. 2004).  
The Court interpreted each of the three words within the phrase “custody 
transfer meter” in arriving at a comprehensive definition.
 
“Custody” 
is defined as “immediate charge and control . . .  exercised by a person or an authority; also: safekeeping.” Merriam-Webster’s 
Collegiate Dictionary 285 (10th ed. 2000). “Transfer” is defined as “to convey 
from one person, place, or situation to another: transport” or “to cause to pass 
from one to another: transmit” or “to make over the possession or control of: 
convey.” Id. at 1249. “Meter” is 
defined as “one that measures; esp: an official measurer of commodities.” Id. at 729. Construing the words in the 
context of valuing gas, a custody transfer meter is an official 
measurer of gas as it passes from one entity to another for the other’s 
immediate charge or control.
 
Id., 
¶ 35, 94 P.3d  at 444 (emphasis added). 
 
[¶18]   With this definition in mind the 
Board in this case concluded that the meters at the wellheads were not “custody 
transfer meters” for Exxon’s share of gas production:
 
87. 
. . . [T]he meters in question . . . are not under the definition set out by the 
Wyoming Supreme Court in Amoco, 
custody transfer meters with regard to raw gas production owned by Exxon 
Mobil.
 
88.  Exxon Mobil is the sole leaseholder – 
working interest owner – in both the Lake Ridge and Graphite Units.  It is therefore the only “entity” 
entitled to the raw gas produced in those Units, thus such gas can not (sic), in 
any legal senses (sic), pass “from one entity to another for the other’s 
immediate charge or control.” 
 
89. 
The same conclusion applies for the raw gas produced from the Fogarty Creek Unit 
to which Exxon is entitled.  That 
gas as well does not pass, in fact, cannot pass, from one entity to another at 
the wing valves as Exxon Mobil is the only entity entitled 
thereto.
 
(internal 
citations omitted).
 
[¶19]   Exxon argues that the Board’s 
determination that the meters were not custody transfer meters was erroneous 
because an “implied” transfer of the gas it owns takes place at the meters at 
the wells.  In support of this 
argument Exxon emphasizes the fact that the Board found that the meters were 
custody transfer meters for Howell’s and Yates’ share of gas and that the meters 
were therefore the proper valuation point.  
Accordingly, Exxon argues that its share of the gas, part of a common gas 
stream along with Howell’s and Yates’ gas, must have the same uniform point of 
valuation.   

 
[¶20]   The Court is not persuaded by 
Exxon’s argument for two reasons.  
First, a ruling in favor of Exxon would require this Court to modify the 
Amoco definition of a custody 
transfer meter.  The Court declines 
to do so at this time.  “[A] custody 
transfer meter is an official measurer of gas as it passes from one entity to 
another for the other’s immediate charge or control.”  Amoco, ¶ 35, 94 P.3d  at 444.6  Here, Exxon has custody of the gas both 
prior to and after the gas passes through the meters at the wells.   Therefore, the requirement that 
the gas pass from “one entity to another” at the meter cannot be satisfied.  If the current definition of a “custody 
transfer meter” were to be modified so as to exclude the one entity to another 
requirement or to specifically incorporate an implied transfer scenario such as 
the one at bar, the Court believes the Legislature, rather than this Court, is 
the appropriate body to make this determination.
 
[¶21]   Second, as discussed infra, 
Howell’s and Yates’ share of the gas and its valuation point were not issues 
properly before the Board.  
Consequently, Exxon’s reliance on the Board’s rulings as to Howell’s and 
Yates’ share of gas is unconvincing.  

 
[¶22]   The Board’s determination that the 
meters in question were not custody transfer meters for Exxon’s share of the gas 
harmonizes with precedent and definitions established in the Amoco decision.  Thus, the Court finds that the Board’s 
determination on this issue is supported by substantial evidence, is not 
arbitrary or capricious and comports with law.  
 
II.            
Howell’s 
and Yates’ Point of Valuation - Did the Board have the authority to make this 
determination?
 
[¶23]   The final issue is whether it was 
proper for the Board to determine the meters at the wells were “custody transfer 
meters” for Howell’s and Yates’ share of gas production in the LaBarge 
Field.  
 
[¶24]   Courts must have jurisdiction to 
hear cases.   See, e.g., Wyo. Const. art. 5, §§ 2 - 3, 
10; Wyo. Stat. Ann. § 5-1-107; Wyo. Stat. Ann. § 5-6-102; Wyo. Stat. Ann. §§ 
5-9-128 – 130.  Like courts, 
administrative agencies must have jurisdiction before they can hear a case.  Diamond B Servs., Inc. v. Rohde, 2005 WY 
130, ¶¶ 13-14, 120 P.3d 1031, 1038 (Wyo. 2005); Amoco Prod. Co. v. Wyo. State Bd. of 
Equalization, 7 P.3d 900, 904 (Wyo. 2000).  Whether a court or agency has 
jurisdiction to decide a particular matter is a question of law, subject to de novo review.  Dir. of the Office of State Lands & 
Invs., Bd. of Land Comm’rs v. Merbanco, Inc., 2003 WY 73, ¶ 7, 70 P.3d 241, 
246 (Wyo. 2003).
 
            
An administrative agency is limited in authority to 
powers legislatively delegated. Administrative agencies are creatures of statute and 
their power is dependent upon statutes, so that they must find within the 
statute warrant for the exercise of any authority which they 
claim.
 
Amoco 
Prod. Co. v. Wyo. State Bd. of Equalization, 
12 P.3d 668, 673 (Wyo. 2000) 
(citations omitted). 
 
[¶25]   As stated above, administrative 
agencies derive their jurisdiction and authority via statute.  The Wyoming Constitution defines the 
State Board of Equalization’s duties as “equaliz[ing] the valuation on all 
property in the several counties and other such duties as may be prescribed by 
law.”  Wyo. Const. art. 15, § 
10.  The Board is also charged with 
“hear[ing] appeals from county boards of equalization and review[ing] final 
decisions of the department upon application of any interested person adversely 
affected[.]”  Wyo. Stat. Ann. § 
39-11-102.1(c).  Any person 
aggrieved by a Department of Revenue determination may appeal to the Board.  Wyo. Stat. Ann. § 39-14-209(b)(i).  This would specifically include a 
taxpayer who feels aggrieved by the valuation of natural gas production and the 
accompanying severance tax levied by the Department, as is the case here.  Wyo. Stat. Ann. § 39-14-209(b)(iv), 
(vi).  In short, the Board has the 
authority to hear appeals from any interested person(s) adversely affected by 
final Department determinations.
 
[¶26]   The Wyoming Supreme Court has 
discussed the meaning of an adversely affected person:7
 
            
An aggrieved or adversely affected person is one who has a legally 
recognizable interest in that which will be affected by the action. A potential 
litigant must show injury or potential injury by alleging a perceptible, rather 
than a speculative, harm resulting from the agency action. The interest which 
will sustain a right to appeal must generally be substantial, immediate, and 
pecuniary. A future, contingent, or merely speculative interest is ordinarily 
not sufficient.
 
Northfork 
Citizens, ¶ 
9, 189 P.3d  at 262 (Wyo. 2008) (citations omitted).
 
[¶27]   The Court finds that Howell and 
Yates were not “interested person[s] adversely affected” or “aggrieved 
person[s]” because they, unlike Exxon, did not appeal the Department’s valuation 
and assessment of taxes on the gas they produced from the LaBarge Field in 
2005.  Wyo. Stat. Ann. § 
39-11-102.1(c); Wyo. Stat. Ann. § 39-14-209(b)(i).  Howell and Yates are not, and have never 
been, parties to this action.  If a 
party does not appeal a decision rendered by an administrative agency, the 
decision is rendered final as to the non-appealing party.  See, e.g., Amax Coal West, Inc. v. Wyo. State Bd. of 
Equalization, 896 P.2d 1329, 1333 (Wyo. 1995) (by failing to appeal, 
taxpayer acquiesced to the valuation formula used by the Department of Revenue 
in the context of ad valorem property taxes levied on coal production); 
Joelson 
v. City of Casper, 
676 P.2d 570, 573 (Wyo. 1984) (homeowners’ failure to appeal orders issued by 
city’s administrative agency board divested the district court and this Court of 
jurisdiction to hear a subsequent case with the same issues and parties that 
were previously before the administrative agency); Slavens v. Bd. of County Comm’rs for Uinta 
County, 854 P.2d 683, 686-87 (Wyo. 1993) (employee’s failure to appeal the 
district court’s decision affirming a hearing examiner’s determination to 
terminate the employee barred a subsequent action by the employee since no 
appeal was taken from the initial administrative decision). Since Howell and 
Yates did not appeal the Department’s original decision regarding gas produced 
from the LaBarge Field in 2005, there was nothing for the Board, or this Court, 
to adjudicate concerning Howell and Yates. 
 
[¶28]   In the context of severance tax 
levied on natural gas production, the Court holds the Board does not have the 
authority to determine the valuation point for “non-party” persons or entities 
that do not appeal their tax assessments.  
In essence, issues related to Howell’s and Yates’ share of gas were not 
properly before Board, the Board acted beyond its statutory authority in 
rendering decisions on these issues, and as such, these determinations must be 
reversed.  
 
CONCLUSION
 
[¶29]   The Court affirms the Board’s 
determination that the meters were not custody transfer meters for Exxon’s 
gas.  The Court reverses the Board’s 
determination that the meters were custody transfer meters for Howell’s and 
Yates’ gas on the basis that the issue was not properly before the Board and 
that Howell and Yates were not aggrieved parties.8 
 
FOOTNOTES
 
1Wyo. Stat. Ann. § 39-14-203(b)(iv) provides the basis for severance tax 
levied on natural gas production.  
The statute states “[t]he production process for natural gas is completed 
after extracting from the well, gathering, separating, injecting and any other 
activity which occurs before the outlet of the initial dehydrator.  When no dehydration is performed, other 
than within a processing facility, the production process is completed at the 
inlet to the initial transportation related compressor, custody transfer meter 
or processing facility, whichever comes first.”  
2For simplicity the Court will refer to Howell and Yates and their 
successors in interest as “Howell and Yates” for the remainder of this 
decision.  

  3A “working 
interest” is the “interest granted under an oil and gas lease, giving the lessee 
the right to work on the leased property to search for, develop and produce oil 
and gas and the obligation to pay all costs of production.”  Wyo. Stat. Ann. § 30-5-304 (a)(viii).
 “4Nonconsents” are 
working interest owners who do not participate in the cost of drilling the 
well.  Ordinarily, “nonconsent” 
owners cannot receive any proceeds from the well until the working interest 
owners have been compensated for the cost of drilling plus a penalty.  State Board of Equalization Findings of 
Fact, ¶¶ 2, 18.  See also, Wyo. Stat. Ann. § 30-5-109 
(g).
 
5The three options referenced are the three places in the production 
process (the inlet to the initial transportation related compressor, the custody 
transfer meter or processing facility) upon which the production of natural gas 
can be considered complete when no dehydration is performed. These three options 
are listed in the second sentence of Wyo. Stat. Ann. § 39-14-203(b)(iv), which 
directs production is deemed complete at the first of the three places to 
occur.     

6The Court notes that Amoco was 
decided in 2004.  The controversy 
currently before the Court involves gas produced in 2005.  Exxon was therefore on notice of the Amoco decision and associated definition 
of a “custody transfer meter.”     

7Under the Wyoming Administrative Procedure Act the definition of a 
“person” who may seek judicial review includes:  individuals, partnerships, corporations 
and government subdivisions. Wyo. Stat. Ann. § 16-3-101(b)(vii).  
8In reaching this conclusion the Court does not make a determination on 
whether different interest owners in a common gas stream can in fact have 
different points of valuation for tax purposes.  Given that Howell and Yates are not 
parties to the present action, the Court believes the answer to that question 
should be left for another day when it is properly before the Court.