Title: ULTRA RESOURCES, INC. a Wyoming corporation and WILLIAMS PRODUCTION ROCKY MOUNTAIN CO., a Delaware corporation V. DOYLE and MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION, MICHAEL L. KLEIN and JEANNE KLEIN, RONNIE H. WESTBROOK and KAREN WESTBROOK; ARROWHEAD RESOURCES (U.S.A.) LTD V. DOYLE and MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION, MICHAEL L. KLEIN and JEANNE KLEIN, RONNIE H. WESTBROOK and KAREN WESTBROOK; LANCE OIL & GAS COMPANY, a Delaware corporation V. DOYLE and MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION MICHAEL L. KLEIN and JEANNE KLEIN, RONNIE H. WESTBROOK and KAREN WESTBROOK; SHELL ROCKY MOUNTAIN PRODUCTION, LLC, a Delaware corporation and SWEPI, LP, a Delaware limited partnership V. DOYLE and MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION, MICHAEL L. KLEIN and JEANNE KLEIN, RONNIE H. WESTBROOK and KAREN WESTBROOK

State: wyoming

Issuer: Wyoming Supreme Court

Document:

ULTRA RESOURCES, INC. a Wyoming corporation and WILLIAMS PRODUCTION ROCKY MOUNTAIN CO., a Delaware corporation V. DOYLE and MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION, MICHAEL L. KLEIN and JEANNE KLEIN, RONNIE H. WESTBROOK and KAREN WESTBROOK; ARROWHEAD RESOURCES (U.S.A.) LTD V. DOYLE and MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION, MICHAEL L. KLEIN and JEANNE KLEIN, RONNIE H. WESTBROOK and KAREN WESTBROOK; LANCE OIL & GAS COMPANY, a Delaware corporation V. DOYLE and MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION MICHAEL L. KLEIN and JEANNE KLEIN, RONNIE H. WESTBROOK and KAREN WESTBROOK; SHELL ROCKY MOUNTAIN PRODUCTION, LLC, a Delaware corporation and SWEPI, LP, a Delaware limited partnership V. DOYLE and MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION, MICHAEL L. KLEIN and JEANNE KLEIN, RONNIE H. WESTBROOK and KAREN WESTBROOK2010 WY 36226 P.3d 889Case Number: S-08-0258, S-08-0259, S-08-026Decided: 03/23/2010
OCTOBER 
TERM, A.D. 2009

 
 
ULTRA 
RESOURCES, INC. a Wyoming corporation and WILLIAMS PRODUCTION ROCKY MOUNTAIN 
CO., a Delaware 
corporation,Appellants(Defendants),v.DOYLE and 
MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION, MICHAEL L. KLEIN and JEANNE 
KLEIN, RONNIE H. WESTBROOK and KAREN 
WESTBROOK,Appellees(Plaintiffs).

 
 
 
 
ARROWHEAD 
RESOURCES (U.S.A.) LTD,Appellant(Defendant),v.DOYLE 
and MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION, MICHAEL L. KLEIN and 
JEANNE KLEIN, RONNIE H.

 
 
 
 
WESTBROOK 
and KAREN WESTBROOK,Appellees(Plaintiffs).

 
 
LANCE 
OIL & GAS COMPANY, a Delaware 
corporation,Appellant(Defendant),v.DOYLE and 
MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION MICHAEL L. KLEIN and JEANNE 
KLEIN, RONNIE H. WESTBROOK and KAREN 
WESTBROOK,Appellees(Plaintiffs).

 
 
 
 
SHELL 
ROCKY MOUNTAIN PRODUCTION, LLC, a Delaware corporation and SWEPI, LP, a Delaware 
limited partnership,Appellants(Defendants),v.DOYLE 
and MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION, MICHAEL L. KLEIN and 
JEANNE KLEIN, RONNIE H.

 
 
 
 
WESTBROOK 
and KAREN WESTBROOK,Appellees(Plaintiffs).

 
 
 
 
DOYLE 
and MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION, MICHAEL L. KLEIN and 
JEANNE KLEIN, RONNIE H. WESTBROOK and KAREN 
WESTBROOK,Appellants(Plaintiffs),v.ULTRA RESOURCES, 
INC., a Wyoming corporation, SHELL ROCKY MOUNTAIN PRODUCTION, LLC, a Delaware 
corporation, LANCE OIL & GAS COMPANY, a Delaware corporation, SWEPI, LP, a 
Delaware limited partnership, WILLIAMS PRODUCTION ROCKY MOUNTAIN CO., a Delaware 
corporation, and ARROWHEAD RESOURCES (U.S.A.) 
LTD.,Appellees(Defendants).

 
 
ULTRA 
RESOURCES, INC., a Wyoming 
corporation,Appellant(Defendant),v.DOYLE and 
MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION, MICHAEL L. KLEIN and JEANNE 
KLEIN, RONNIE H. WESTBROOK and KAREN 
WESTBROOK,Appellees(Plaintiffs).

 
 
 SHELL 
ROCKY MOUNTAIN PRODUCTION, LLC, a Delaware 
corporation,Appellant(Defendant),v.DOYLE and 
MARGARET M. HARTMAN, JOHN H. HENDRIX CORPORATION,MICHAEL L. KLEIN and JEANNE 
KLEIN, RONNIE H. WESTBROOK and KAREN 
WESTBROOK,Appellees(Plaintiffs).

 
 

Appeal 
from the District Court of Sublette County

The 
Honorable Norman E. Young, Judge

 
 
Representing 
Ultra Resources, Inc. and Williams Production Rocky Mountain 
Co.:

Douglas 
J. Mason of Mason & Mason, P.C., Pinedale, Wyoming; George W. Mueller of 
Burns, Wall, Smith and Mueller, P.C., Denver, Colorado.  Argument by Mr. 
Mueller.

 
 
Representing 
Doyle and Margaret M. Hartman, John H. Hendrix Corporation, Michael L. Klein and 
Jeanne Klein, Ronnie H. Westbrook and Karen Westbrook:  

Michael 
J. Sullivan and John A. Masterson of Rothgerber, Johnson & Lyons, LLP, 
Casper, Wyoming; James M. Lyons and D. Elizabeth Wills of  Rothgerber, Johnson & Lyons, LLP, 
Denver, Colorado; J.E. Gallegos and Michael J. Condon of Gallegos Law Firm, 
P.C., Santa Fe, New Mexico.  
Argument by Messrs. Sullivan and Gallegos.

 
 
Representing 
Arrowhead Resources (U.S.A.) LTD:

Nancy 
D. Freudenthal of Davis & Cannon, LLP, Cheyenne, Wyoming; Rebecca Hitchcock 
Noecker of Beatty & Wozniak, P.C., Denver, Colorado.  Argument by Ms. 
Freudenthal.

 
 
Representing 
Lance Oil & Gas Company, Inc.:

Paul 
J. Hickey of Hickey & Evans, LLP, Cheyenne, Wyoming; David W. Stark and 
Ezekiel J. Williams of Faegre & Benson, LLP, Denver, Colorado.  Argument by Mr. 
Hickey.

 
 
Representing 
Shell Rocky Mountain Production, LLC and SWEPI, 
LP:

David 
B. Hooper of Hooper Law Offices, P.C., Riverton, Wyoming; Phillip D. Barber of 
Phillip D. Barber, P.C., Denver, Colorado.  
Argument by Mr. Barber.

 
 
Before 
VOIGT, C.J., and GOLDEN, HILL, KITE, and BURKE, 
JJ.

 
 

KITE, 
J., delivers 
the opinion of the Court; VOIGT, C.J., files a dissenting 
opinion.

 
 
KITE, 
Justice.

 
 
[¶1]      This case 
encompasses seven appeals and cross-appeals and involves seven plaintiffs and 
six defendants.1  The contest is over a net profits 
interest (NPI) granted by Malco Refineries, Inc., El Paso Natural Gas Company, 
and Continental Oil Company (referred to in the documents as "First Parties") to 
Novi Oil Company (Novi) in the 1950s.  
The NPI was consideration for Novi's assignment of certain oil and gas 
leases to First Parties.  Generally, 
the district court concluded that the NPI continues to exist and is owned by the 
plaintiffs, who are successors to Novi, and the defendants, as successors to 
First Parties, are obligated to pay net profits to them.  The district court also awarded 
statutory penalties, interest and attorney fees to the plaintiffs.2  We affirm in part and reverse and remand 
in part.

 
 
ISSUES

 
 
[¶2]      The numerous 
briefs filed herein set forth dozens of issues, many of which are 
duplicative.  We have identified the 
following separate issues:

 
 
            
Summary Judgment 
Issues

 
 
            
1.         Were 
the plaintiffs entitled to summary judgment on the question of whether the NPI 
survived termination of the Pinedale Unit?

 
 
            
2.         
Were the plaintiffs entitled to summary judgment on the question of 
whether they own the NPI and do the defendants have standing to contest 
plaintiffs' claim of ownership?  

 
 
            
Rule 52(c) 
Rulings

 
 
            
3.         
Did the district court err by granting the defendants' Rule 52(c) motion 
regarding the plaintiffs' duty to provide proof of their ownership of the NPI 
under Section 5 of the Pinedale Unit Area Net Profits Contract (Unit NPI 
Contract) or by determining that the plaintiffs gave sufficient notice of their 
ownership in Mr. Hartman's February 22, 2006, letter?  

            

4.         
Did the district court err in granting the defendants' Rule 52(c) motion 
on the plaintiffs' claim for breach of the implied covenant of good faith and 
fair dealing?

 
 
5.         
Did the district court err in granting the non-operator defendants' Rule 
52(c) motion on the plaintiffs' Wyoming Royalty Payment Act, Wyo. Stat. Ann. §§ 
30-5-301 through 305 (LexisNexis 2009) (WRPA) claims?  

 
 
            
Bench Trial Rulings 

 
 
            
6.         
Did the district court correctly determine that the non-operating 
defendants breached the Unit NPI Contract by failing to pay the NPI?

 
 
            
7.         
Did the district court err by ruling that plaintiffs were entitled to be 
awarded WRPA interest and penalties against the operating defendants Shell and 
Ultra when the Unit NPI Contract provided that they could withhold payment of 
net profits, without interest, during the pendency of any dispute regarding 
ownership of the NPI?

 
 
8.         Did the 
district court properly determine that State Lease 79-0645 was a "replacement 
lease" under the Unit NPI Contract?

 
 
9.         
Did the district court err by ruling that plaintiffs' claims were not 
time barred under either the statute of limitations or the equitable doctrine of 
laches?

 
 
10.       Did the 
district court err by refusing to exclude certain expenses from the net profits 
calculation?

 
 
11.       Did the 
district court err by holding all defendants jointly and severally liable for 
the entire judgment?

 
 
12.       Did the 
district court properly grant credit to the defendants for plaintiffs' 
settlement with Questar/Wexpro?

 
 
            
Attorney Fees

 
 
            
13.       
Were the non-operators the prevailing parties and, therefore, entitled 

to 
an award of attorney fees under the WRPA?

 
 
14.       Did the 
district court abuse its discretion by awarding plaintiffs over $3.9 million in 
attorney fees?

 
 
FACTS

 
 
[¶3]      In the 1950s, 
First Parties sought to develop oil and gas interests in Sublette County, 
Wyoming.  Because Novi controlled 
some leases that First Parties wanted to include in their development plans, 
First Parties and Novi entered into the "Agreement for Assignment of Novi Leases 
and for a Net Profits Interest Pinedale Unit Area Sublette County, Wyoming" 
(Assignment Agreement).  The 
Assignment Agreement provided that Novi would assign three federal leases and 
one fee lease to the First Parties in exchange for  "5% of the net profits realized from 
operations for oil and gas by First Parties under the leases shown on Exhibit A 
. . . ."  Exhibit A included a list 
of sixty-two leases, including the four Novi leases.  The First Parties intended to unitize 
the leases identified in Exhibit A, except portions of two of the Novi leases 
that were not to be included in the unit at that time.  The Assignment Agreement further stated 
that Novi was also to receive an NPI for the portions of the leases not included 
in the unit and identified those leases in Exhibit A-1.  The Assignment Agreement provided that 
final execution of the NPI documents and lease assignments were conditioned upon 
the federal government's approval of the Pinedale Unit.     

 
 
[¶4]      In addition, the 
First Parties entered into an agreement among themselves, the Supplemental 
Accounting Agreement.  As found by 
the district court, the purpose of the Supplemental Accounting Agreement was to 
"outline[] the manner in which the First Parties would account for and pay any 
profits from production."  

 
 
 [¶5]     In 1954, the Pinedale 
Unit was approved by the United States Geological Survey (USGS), and the 
Pinedale Unit Agreement (Unit Agreement) was executed between the operators, 
other working interest owners and Novi.  
Among other things, the Unit Agreement outlined the operators' 
responsibilities, included general unit accounting terms, and provided for 
contraction of the unit to eliminate non-producing properties at certain 
intervals.   

 
 
[¶6]      Consistent with 
the requirements of the Assignment Agreement, Novi and the First Parties entered 
into the Unit NPI Contract which pertained to the leases included in the 
Pinedale Unit and identified in Exhibit A.  The Unit NPI Contract contains many of 
the terms and obligations that are presently at issue:

 
 
            
1.  NET PROFITS INTEREST 

 
 
            
Subject to the conditions hereinafter set forth, First Parties agree to 
pay to Novi a sum or sums representing 5% of the net profits (as hereinafter 
defined), herein referred to as "said net profits interest," resulting from 
operations for oil and gas by First Parties, or any of them, under those certain 
leases committed to that certain Unit Agreement for the Development and 
Operation of the Pinedale Unit Area and shown on Exhibit A attached hereto and 
made a part hereof, such leases being herein referred to as "said leases."

 
 
            
2.  COMPUTATION 

 
 
            
Net profits shall be computed on the basis of all operations under the 
Pinedale Unit applicable to said leases . . . .

            
Net profits as used herein shall mean the gross revenue (not required for 
payment of the overriding royalties shown on Exhibit A and landowners' 
royalties) from unit operations allocable to said leases after deduction of all 
expenses of unit operations (unit operations being construed to include all 
operations of any of First Parties under said leases) except those charged to 
the working interest owners, if any, under the said unit other than First 
Parties.

 
 
            
In computing gross revenue, there shall be taken into account the 
proceeds of production sold for delivery at the wellhead.  As to production not so sold, the fair 
market value of such production at the wellhead shall be taken into account; 

 
 
            
If there should be any overriding royalty or other burden on production 
allocated to the Novi leases other than the overriding royalties shown on 
Exhibit A and the landowners' royalties, such excess override or burden shall be 
exclusively the responsibility of Novi and Novi shall bear and pay any such 
additional burdens whether or not net profits are realized.

 
 
            
Expenses shall include by way of illustration but not by way of 
limitation, expenses incurred in connection with the preparation for the 
drilling of and drilling of wells, whether productive or dry; the equipping, 
completing, plugging and abandoning of wells; the producing of wells and 
treatment, storage and marketing of production therefrom; the building of roads, 
campsites and the making of improvements in connection with unit operations; 
expenses incurred in connection with exploratory work conducted in connection 
with operations hereunder; expenses incurred in connection with the examining 
and perfecting of and defense of titles to said leases, including attorneys' 
fees incurred in connection therewith; losses, damages or liabilities sustained 
or incurred in connection with unit operations; gross production and ad valorem 
taxes or any tax measured by production; premiums paid for workmen's 
compensation insurance, public liability, fire, wind, tornado or other 
insurance; and any other expenses and charges that are reasonable and customary 
in connection with the operation and development of oil and gas properties and 
which are properly chargeable against the leasehold interests.  Without limiting the foregoing, the 
accounting with respect to unit operations shall be in accordance with the 
Accounting Procedure attached hereto and marked "Exhibit C-1" and made a part 
hereof to the extent that such exhibit is applicable and not inconsistent with 
the foregoing provisions and including the overhead charges provided for in said 
exhibit.

 
 
                                    
3.  PAYMENT 

 
 
            
Inasmuch as the Operator in charge of operations under said leases and 
under the said Pinedale Unit Agreement will either be Continental or El Paso, or 
both, the responsibility for handling the accounting for net profits and making 
payments hereunder to Novi for its share thereof shall be the responsibility of 
Continental and El Paso, such parties (or either of them) being hereinafter 
sometimes referred to for convenience as "Operator."

 
 
            
Novi shall be entitled to receive its percentage of net profits at the 
end of any month whenever it shall appear at the end of such month that net 
profits have been realized as a result of operations under said leases, taking 
into consideration all expenses theretofore incurred in connection with such 
operations and all accounts payable or receivable with regard thereto at the end 
of said month and all payments of net profits theretofore made to Novi.  In making the foregoing computations, 
deficits shall be carried over from month to month and the accumulated total 
thereto applied against subsequent earnings before profits will be considered to 
have accrued.  Payment of such net 
profits shall be made as soon as practicable after the end of any month in which 
net profits have been so realized.  
Notwithstanding that there may be separate operations under said leases 
relating to separate deposits of oil and gas (whether conducted by Continental 
or El Paso or some by Continental and some by El Paso), all accounting for the 
purpose of determining net profits hereunder shall be upon a consolidated basis 
involving all operations under said leases and the said Pinedale Unit.

 
 
            
Operator shall keep an accurate record of all accounts hereunder, showing 
the costs and expenses incurred and charges made and all receipts and credits 
received, which record shall be available at all reasonable times for the 
examination and inspection of Novi or its duly authorized representative.  Within one (1) month after the close of 
each calendar month, Operator shall furnish to Novi a statement of costs and 
expenses incurred and charges made and all receipts and credits received during 
such calendar month.

 
 
            
4.         
LOGS AND INFORMATION

RELATING 
TO PRODUCTION

AND 
EXPLORATORY WORK 

 
 
Operator 
shall furnish Novi copies of well logs of all types with respect to operations 
hereunder and shall, at Novi's request, furnish Novi with all information 
relative to producing operations hereunder or relative to exploratory work 
conducted in connection with operations hereunder whenever the expense of any 
such exploratory work is chargeable as an expense in computing net profits under 
the provisions hereof.

 
 
            
5.  TRANSFER 

 
 
            
Operator shall not be required to take cognizance of any deed, 
assignment, transfer or passing of title by will, testament or inheritance of 
said net profits interest, or any interest therein, unless and until Operator 
shall have been furnished with legal evidence of such deed, assignment, transfer 
or passing of title by will, testament or inheritance which is acceptable to 
Operator. . . .  In no event shall 
Operator be liable hereunder to any successor in interest of Novi or its 
successors for all or any part of said overriding royalty until after Operator 
has been furnished with proof of interest or notice of adverse claim of such 
successor in interest, and then only for payments accruing after the first day 
of the following calendar month.  In 
the event of any dispute at any time concerning the ownership of any net profits 
interest payable hereunder, Operator may withhold payment of such net profits 
interest or any part thereof of the amount in dispute without interest until 
such dispute is settled.

 
 
. 
. . .

 
 
            
7.  SURRENDER 

 
 
            
First Parties reserve and shall have the right to release and surrender 
said leases except those acquired from Novi, either in whole or in part, at any 
time without giving any notice thereof to or obtaining any consent or approval 
thereof from Novi or Novi's successors in interest, and such release or 
surrender shall terminate the net profits interest herein provided for as to the 
leasehold interest which is so released and surrendered.

 
 
            
As to such of said leases as were acquired by First Parties from Novi, if 
First Parties desire at any time to surrender their entire and undivided 
interest in such leases, or any part, thereof, First Parties shall first offer 
in writing to transfer and assign the same to Novi . . . . and shall, upon 
acceptance of such offer by Novi . . ., transfer and assign such interest to 
Novi.  Upon acceptance of such 
assignment, First Parties shall be relieved of any and all responsibility or 
liability hereunder with respect to the interest assigned . . . . 

 
 
. 
. . .

            

            
Notwithstanding any surrender, release or assignment of interest under 
the provisions of this section, Novi's net profits interest in operations 
relating to lands the leasehold interest in which is not so surrendered, 
released or assigned shall remain a 5% net profits interest.  In the event any lease is surrendered or 
released pursuant to the provisions of this section and Novi shall thereafter 
obtain a lease or other interest in the lands the leasehold interest in which is 
so released or surrendered, Novi shall be entitled to hold such interest free 
and clear of any obligations under the provisions hereof.  In the event any lease is surrendered or 
released pursuant to the provisions of this section and thereafter First 
Parties, or any of them, obtain a lease covering lands the leasehold interest in 
which has been so surrendered, the interest so acquired or obtained by First 
Parties, or any of them, shall be subject to the provisions hereof, if such new 
lease is obtained within five (5) years from the date of any such surrender or 
release; otherwise, such new lease shall be held by First Parties, or any one of 
them acquiring such interest, free and clear of the provisions of this agreement 
and without any obligations whatsoever to Novi.

 
 
            
This agreement shall be binding upon and inure to the benefit of the 
heirs, representatives, administrators, executors, successors and assigns of the 
parties hereto.

 
 
[¶7]      Novi and First 
Parties also entered into the Net Profits Contract Pinedale Area of Interest 
Sublette County, Wyoming (Area NPI Contract) contemplated by the Assignment 
Agreement.  The Area NPI Contract 
covered the portions of the two Novi leases lying outside the Pinedale Unit and 
identified in Exhibit A-1 of the Assignment Agreement.  On March 18, 1955, Novi executed 
assignments of its leases to the First Parties. 

 
 
[¶8]      During the two 
decades following creation of the Pinedale Unit, the First Parties drilled some 
wells and discovered a large reservoir of gas in the Pinedale anticline, but, 
for various reasons, production was impracticable at that time.  The record indicates that, over time, 
the USGS approved extensions to the automatic unit contraction date.3  Finally, in 1977, the Pinedale Unit 
contracted from 91,000 acres to 14,000 acres, located within two participating 
areas.   

 
 
[¶9]      The Pinedale Unit 
terminated on July 10, 1981, without having earned any profits.  Two new units were, however, created out 
of the Pinedale Unit acreage:  the 
Mesa Unit in the north, and the New Fork Unit in the south.  The federal documents approving 
formation of the Mesa and New Fork units established that the Pinedale Unit did 
not terminate until after the new units were in place and recognized that the 
acreage was transferred from the Pinedale Unit into the new units.  The Mesa Unit Agreement stated that 
portions of the land within the unit were subject to the Pinedale Unit 
Agreement, and "in the event of a discovery of unitized substances in paying 
quantities under this agreement, the Pinedale Unit Agreement shall be contracted 
and the lands subject thereto shall be merged into this unit agreement . . . 
."  The Department of Interior 
letter authorizing the New Fork Unit specifically stated that "the Fort Union 
participating area A' of the Pinedale Unit [was] . . .  transferred intact to and committed to 
the New Fork unit."  The New Fork 
Unit terminated in 2001.   

 
 
[¶10]   As of 2006, when plaintiffs 
demanded payment of the NPI and this action was filed, twenty-two of the 
original sixty-two leases covered by the Unit NPI Contract, including two of the 
leases assigned by Novi, all with issue dates of 1950 through 1952, were still 
in place.  The continuation of the 
leases was the result of having been part of the Pinedale Unit, the automatic 
two year extension of the federal leases after contraction or termination of a 
unit, inclusion in the Mesa or New Fork units, and/or production on individual 
leases.  The district court also 
determined that an additional lease, State Lease No. 79-0645, was a "replacement 
lease" subject to the NPI obligations under Section 7 of the Unit NPI Contract 
because it covered the same lands as two of the original Exhibit A leases and 
had been reacquired by a First Party within five years after the original leases 
were surrendered.  

 
 
[¶11]   Over time, all of the original 
parties to the agreements were replaced by successors.  Plaintiffs Doyle and Margaret M. 
Hartman, Michael L. Klein and Jeanne Klein, Ronnie H. Westbrook and Karen 
Westbrook, and John H. Hendrix Corporation claim to have succeeded to Novi's 
NPI.4  The leases remaining under the Unit NPI 
Contract became profitable in May 2005.  
On February 22, 2006, the plaintiffs sent a letter to the defendants, 
indicating that they owned the NPI and requesting an accounting and 
payment.  When the defendants did 
not meet their demands, the plaintiffs brought suit on March 31, 2006.  The plaintiffs' amended complaint lists 
the defendants in two groups:  Group 
A defendantsQuestar Exploration and Production Company (Questar), Wexpro 
Company (Wexpro), Ultra Resources, Inc. (Ultra), and Shell Rocky Mountain 
Production, L.L.C. (Shell)working interest owners and operators in the Pinedale 
Field; and Group B defendantsLance Oil & Gas Company (Lance), SWEPI, LP 
(SWEPI), Williams Production Rocky Mountain Co. (Williams), and Arrowhead 
Resources (U.S.A.) LTD (Arrowhead)working interest owners in the Pinedale Field 
with no operating responsibilities.5 

 
 
[¶12]   The amended complaint asserted 
several claims for relief, including:  
declaratory judgment as to the validity, and plaintiffs' ownership, of 
the NPI under the Unit NPI Contract; breach of the Unit NPI Contract; breach of 
the duty of good faith and fair dealing; breach of the WRPA; slander of title 
(Questar); conversion; constructive trust (in the alternative); and rescission 
and reassignment of Novi leases to plaintiffs (in the alternative).  The defendants generally denied the 
plaintiffs' claims and asserted various affirmative defenses and 
counterclaims.  

 
 
[¶13]   The plaintiffs filed two motions 
for summary judgment:  Motion for 
Partial Summary Judgment No. 1 Declaring the Net Profits Interest as Lease-Based 
Pursuant to the Unambiguous Language of the Agreements; and Motion for Partial 
Summary Judgment No. 2 Declaring Plaintiffs the Owners of the Net Profits 
Interest.  The defendants filed a 
motion for summary judgment arguing their obligation to pay net profits under 
the Unit NPI Contract depended upon the leases being included in the Pinedale 
Unit and, since the Pinedale Unit terminated without ever having shown any 
profits, the NPI no longer existed.  Some of the defendants also moved for 
summary judgment asserting the plaintiffs' claims were barred by various 
statutes of limitation. 

 
 
[¶14]   The district court heard all of the 
summary judgment motions on April 30, 2007.  It granted both of the plaintiffs' 
motions and denied all of the defendants' motions.  The general effect of the district 
court's summary judgments rulings was two-fold:  the NPI survived termination of the 
Pinedale Unit, meaning that net profits continued to be due on production 
attributable to the leases, and the plaintiffs own the NPI.  After the summary judgment rulings, the 
plaintiffs reached a settlement with defendants Questar and Wexpro.  All claims between the plaintiffs, 
Questar and Wexpro were dismissed by an order entered on September 5, 2007.  Thereafter, the parties agreed to waive 
a jury trial and have the remaining issues determined by the district court. 

 
 
[¶15]   The bench trial on the outstanding 
claims began on October 9, 2007, and ended on October 19, 2007.  At the end of the plaintiffs' 
case-in-chief, the defendants moved for judgment as a matter of law under 
W.R.C.P. 52(c).6  The district court granted the defendants 
judgment under Rule 52(c) as follows:  
1) pursuant to Section 5 of the Unit NPI Contract, the defendants were 
not obligated to pay the NPI until March 2006, because they were not notified of 
the plaintiffs' ownership interest until February 22, 2006;  2) the defendants had not violated the 
implied covenant of good faith and fair dealing by failing to investigate the 
NPI ownership or by failing to account for and pay amounts owed thereunder; and 
Lance and Arrowhead, as non-operator working interest owners, were not liable 
for interest or penalties under the WRPA.   

 
 
[¶16]   During the trial, both sides 
presented expert accounting testimony calculating the NPI on the burdened 
leases.  Although the experts 
differed in their final net profit figures, they agreed that revenues and 
expenses on the NPI leases exceeded $2 billion.  The plaintiffs' expert testified that 
the NPI due to the plaintiffs for the period of March 2006 through December 2006 
was more than $4 million.  The 
defense expert testified that there were no net profits on the NPI leases during 
that time.      

 
 
[¶17]   After the bench trial, the district 
court issued its Findings of Fact, Conclusions of Law and Judgment.  The order reiterated its summary 
judgment and Rule 52 rulings and also included the following holdings: 

 
 
            
1.         
All defendants, as successor to First Parties, breached their obligations 
under the Unit NPI Contract.  

 
 
2.         
State Lease 79-0645 is a replacement lease under § 7 of the Unit NPI 
Contract and is, therefore, burdened by the NPI because it covers the same 
property as two Exhibit A State of Wyoming leases and was acquired by a First 
Party successor within five years after the state leases were surrendered by El 
Paso.   

 
 
            
3.         
The principal sum due for net profits payable for the period March 2006 
through December 2006 is $4,896,589. 

 
 
4.         
The operator defendants violated the WRPA by not paying net profits 
beginning in March 2006, the month after the plaintiffs notified them of their 
ownership of the NPI.  The operators 
are liable to the plaintiffs for the unpaid net profits, plus the statutory 18 
percent per annum interest and the statutory penalty of $100 per month.  

 
 
5.         
All of the defendants are jointly and severally liable under the Unit NPI 
Contract for the judgment amount.  

 
 
6.         
Applying the accounting provisions from the Supplement Accounting 
Agreement, defendants are liable for 70% of the judgment amount, after allowing 
a credit of 30% for the amounts paid in settlement by Questar and Wexpro.  

 
 
            
7.         
All defendants remain obligated under the Unit NPI Contract for 
accounting and payment of the NPI, beginning with January 2007 production.  

 
 
            
8.         
The filing of this action in March 2006 was timely under the applicable 
ten-year statute of limitations for breach of contract.  See Wyo. Stat. Ann. § 1-3-105(a)(i) 
(LexisNexis 2009).  The defendants 
did not breach the contract until 2005, when net profits began to accrue and 
became payable.  The plaintiffs' 
claim for breach of contract accrued, at the earliest, in May 2005, when revenue 
and expense data became available.  

 
 
            
9.         
The doctrine of laches does not apply in an action at law for breach of 
contract.  Further, the defendants 
proved neither inexcusable delay nor prejudice to establish any of defendants' 
equitable defenses.    

 
 
            
10.       
The operator defendants were responsible for the plaintiffs' attorney 
fees and costs.    

 
 
[¶18]   The district court subsequently 
reviewed the plaintiffs' request for attorney fees and granted judgment in their 
favor for over $3.9 million.  The 
defendants appealed the district court's summary judgment determinations, 
adverse trial rulings and attorney fees award, and the plaintiffs appealed the 
district court's rulings against them. 

 
 
DISCUSSION

 
 
[¶19]   In order to facilitate analysis of 
the many issues in this case, we will divide the discussion into types of 
orders:  1) summary judgments; 2) 
rulings as a matter of law under Rule 52(c); 3) rulings after the bench trial; 
and 4) attorney fee rulings.  

 
 

I.              
Summary 
Judgments

 
 

A.        Standard of Review

 
 
[¶20]   As to the review of a summary 
judgment, we have stated:

 
 
            
A summary judgment is appropriate when no genuine issue as to any 
material fact exists and when the prevailing party is entitled to have a 
judgment as a matter of law.   
Covington v. W.R. Grace-Conn., 
Inc., 952 P.2d 1105, 1106 
(Wyo.1998); see also W.R.C.P. 
56(c).  We evaluate the propriety of 
a summary judgment by employing the same standards and by using the same 
materials as the lower court employed and used.  Kirkwood v. CUNA Mutual Insurance 
Society, 937 P.2d 206, 208 
(Wyo.1997).  We do not accord 
deference to the district court's decisions on issues of law.  Kanzler v. Renner, 937 P.2d 1337, 1341 
(Wyo.1997).  In cases requiring the 
interpretation of a contract, a summary judgment is appropriate only if the 
contract is clear and unambiguous.  
Kirkwood, 937 P.2d at 
208;  Treemont, Inc. v. Hawley, 886 P.2d 589, 592 (Wyo.1994).  

 
 

Wolter 
v. Equitable Res. Energy Co., 
979 P.2d 948, 951 (Wyo. 
1999).  "The court considers the 
record from the viewpoint most favorable to the party opposing the motion, 
giving all favorable inferences to be drawn from the facts contained in 
affidavits, depositions and other proper material appearing in the record to the 
opposing party."  Powder River Oil Co. v. Powder River 
Petroleum Corp., 830 P.2d 403, 406-07 (Wyo. 1992).  Comet Energy Services, LLC v. Powder River 
Oil & Gas Ventures, LLC, 2008 WY 69, ¶ 5, 185 P.3d 1259, 1261 (Wyo. 
2008).   This standard applies 
equally in actions for declaratory judgment.  Coffinberry v. Bd. of County Comm'rs of the 
County of Hot Springs, 2008 WY 
110, ¶ 3, 192 P.3d 978, 979 (Wyo. 2008); Laughter v. Bd. of County Comm'rs for 
Sweetwater County, 2005 WY 
54, ¶ 9, 110 P.3d 875, 879 
(Wyo. 2005). 

 
 
B.        Were 
the plaintiffs entitled to summary judgment on the question of whether the NPI 
created in the Unit NPI Contract survived termination of the Pinedale 
Unit?

 
 
[¶21]   The issue of whether the NPI 
created in the Unit NPI Contract was conditioned upon the continuation of the 
Pinedale Unit is pivotal.  The 
defendants claim that the NPI terminated with the Pinedale Unit and the district 
court erred by interpreting the NPI as being a continued burden on the leases 
listed in the Unit NPI Contract.  
The plaintiffs contend that the district court properly concluded the NPI 
continued to encumber the leases after termination of the Pinedale Unit.  

 
 
[¶22]   Resolution of this issue requires 
interpretation of contracts.  Our 
primary focus in contract interpretation is the parties' intent.  Carlson v. Flocchini Invs., 2005 WY 19, ¶ 15, 106 P.3d 847, 854 (Wyo. 2005).  The "language of the parties expressed 
in their contract must be given effect in accordance with the meaning which that 
language would convey to reasonable persons at the time and place of its 
use."  Moncrief v. Louisiana Land Exploration 
Co., 861 P.2d 516, 524 (Wyo. 
1993).  We employ common sense in 
interpreting contracts and ascribe the words with a rational and reasonable 
intent.  Comet, ¶ 6, 185 P.3d  at 1261; Caballo Coal Co. v. Fidelity Expl. & 
Prod. Co., 2004 WY 6, ¶ 11, 
84 P.3d 311, 314 (Wyo. 2004); Wadi Petroleum, Inc. v. Ultra Resources, 
Inc., 2003 WY 41, ¶¶ 10-11, 
65 P.3d 703, 708 (Wyo. 
2003).  Courts should consider the 
circumstances surrounding execution of the agreement to determine the parties' 
intention, even in reviewing unambiguous contracts.  Mullinnix LLC v. HKB Royalty Trust, 2006 WY 14, ¶ 6, 126 P.3d 909, 915 (Wyo. 2006); Caballo, ¶ 11, 84 P.3d  at 314-15.  

 
 
[¶23]   If we determine that the contract 
conveys a "double or obscure meaning," we must conclude that it is ambiguous.  
Wolter, 979 P.2d  at 951.  
The determination of whether a contract is ambiguous is a matter of law 
for the court to decide, regardless of whether or not the parties agree as to 
the contract's meaning.  Id.  Parol evidence of the parties' intent regarding 
what particular terms in their agreement mean is considered only when the 
contract is ambiguous.  Wells Fargo Bank Wyo., N.A. v. Hodder, 
2006 WY 128, ¶ 31, 144 P.3d 401, 412 (Wyo. 2006).  
Because we use an objective approach to interpret contracts, evidence 
of a party's subjective intent is not admissible, regardless of whether the 
court determines a contract is ambiguous or clear.  Omohundro v. Sullivan, 2009 WY 38, ¶ 24, 202 P.3d 1077, 1084-85 (Wyo. 
2009).

 
 
[¶24]   The defendants do not argue that 
the relevant contractual language is ambiguous or that genuine issues of 
material fact exist which preclude summary judgment.  They argue, instead, that the district 
court erred as a matter of law in interpreting the contract language.     

 
 
[¶25]   Although there is a dispute between 
the parties over which documents are properly considered in determining the 
meaning of the NPI, everyone agrees that the document which actually created the 
NPI was the Unit NPI Contract.  Ferguson v. Coronado Oil Co., 884 P.2d 971, 976 (Wyo. 1994) 
established that the nature of a net profits interest is "determined from the 
instrument creating the interest."  
We will, therefore, start with the Unit NPI Contract; however, before we 
parse the language of the agreement, it is helpful to understand the concepts of 
leasing and unitization in oil and gas exploration and production.  

 
 
[¶26]   The majority of the mineral estate 
First Parties leased and committed to the Pinedale Unit was owned by the federal 
government.  The primary term of 
most of the leases was five years.  
Prior to unitization, a lease could only be held after the primary term 
if there was hydrocarbon production on the leasehold.  Formation of an oil and gas unit is a 
means of holding a number of leases without drilling and obtaining production on 
each lease.   

 
 
[¶27]   The Pinedale Unit was a federal oil 
and gas exploration unit, governed by the Department of the Interior.  After unitization, the unit operator has 
a certain period of time to explore for oil and gas, and, if production is 
obtained, a "participating area" is designated and each lease is considered held 
by production.  Land located within 
the unit but outside a participating area does not participate in the production 
in the participating area, and, in accordance with the unit agreement, the 
boundaries of the unit typically contract to include only the acreage of 
participating areas, thus eliminating from the unit non-producing acreage.  This has the effect of consolidating the 
producing, or participating areas, and releasing the leases that are not 
producing.  In order to encourage 
development of the leases that are eliminated from a unit by contraction, 
federal leases are automatically extended by two years after such 
elimination.   See 30 U.S.C. § 226(m) (1952).  The state leases included in the 
Pinedale Unit apparently did not include a provision for an automatic two year 
extension after unit contraction.     

 
 
[¶28]   Although the date for automatic 
contraction of the Pinedale Unit was extended at least twice,  the unit finally contracted in 1977 
reducing it from over 90,000 acres to just over 14,000 acres.  The contraction triggered the automatic 
two year extension for the eliminated federal leases.  When the Pinedale Unit was terminated in 
1981, some of the lands that were included in the Pinedale Unit folded into the 
newly created New Fork and Mesa Units.  
The New Fork Unit terminated in 2001, but the Mesa Unit is still in 
operation.  All in all, twenty-two 
of the original sixty-two leases included in the Unit NPI are still held by 
production, including two of the original Novi leases.         

 
 
[¶29]   Keeping in mind the purposes of oil 
and gas leasing and unitization, we turn to the Unit NPI Contract.  First, we note there is no express 
language in the contract which states that the NPI would terminate if the leases 
were no longer included in the Pinedale Unit.  Nevertheless, the defendants argue the 
Unit NPI Contract language indicates Novi and First Parties intended that the 
NPI would terminate with the Pinedale Unit. 

 
 
[¶30]   There are several provisions that 
are relevant to the determination of whether the parties intended that the NPI 
was dependent on the continued existence of the Pinedale Unit.  In Section 1, the "Net Profits Interest" 
provision, First Parties agreed to pay to Novi 5% of the net profits 

 
 
resulting 
from operations for oil and gas by First Parties, or any of them, under those 
certain leases committed to that certain Unit Agreement for the Development and 
Operation of the Pinedale Unit Area and shown on Exhibit A attached hereto and 
made a part hereof, such leases being herein referred to as "said leases." 

 
 
[¶31]   The separate lease descriptions, 
referencing the sixty-two leases7 in the Pinedale Unit which 
were subject to the Unit NPI Contract, were attached as Exhibit A to the Unit 
NPI Contract.  The defendants 
emphasize that the Unit NPI Contract defines "said leases" as leases that are 
"committed" to the Pinedale Unit Agreement "and" shown on Exhibit A.  They claim, therefore, that the contract 
created two conditions that must be met before the NPI was valid:  the leases be committed to the Pinedale 
Unit and shown on Exhibit A.  

 
 
[¶32]   The defendants argue that Novi and 
First Parties intended that the term "committed" to the Pinedale Unit be 
interpreted in accordance with its particular usage in the oil and gas 
trade.  They claim that, because the 
Pinedale Unit Agreement is specifically referenced in the Unit NPI Contract, it 
must be considered in interpreting the Unit NPI Contract.  Thus, according to the defendants, 
because the Pinedale Unit terminated years ago before any profits were realized, 
the leases were no longer "committed" to the unit and the NPI no longer exists. 

 
 
[¶33]   We agree that Novi's and First 
Parties' use of the term "committed" to the unit has special meaning in the 
context of unitization in general and the Pinedale Unit specifically, and the 
Unit Agreement is appropriate evidence in interpreting the Unit NPI 
Contract.  Formation of the Pinedale 
Unit was an important part of the parties' plan in negotiating for assignment of 
the Novi leases and the resulting NPI.  
Unitization was a means for both Novi and the First Parties to obtain 
more time for development of the leases, and the Unit NPI Contract would not 
have been executed had the unit not been approved.  Obviously, the parties intended that the 
leases covered by the Unit NPI Agreement initially be "committed" to the 
Pinedale Unit under the terms of the Pinedale Unit Agreement approved by the 
federal government.  That does not, 
however, answer the question of whether the parties intended that the leases be 
burdened by the NPI only so long as the unit existed.     

 
 
[¶34]   The Unit NPI Contract does not 
provide that the NPI was tied only to unit production or that the continued 
existence of the Pinedale Unit was required for the NPI to remain an obligation 
on the leases.  We do not read the 
clear language of the net profit provision as creating two separate conditions 
for paymentthe leases had to continue to be committed to the Pinedale Unit and 
also shown on Exhibit A.  Instead, 
we agree with the district court and conclude that the phrase simply identifies 
the leases originally included in the Unit NPI Contract.  Two of the leases assigned by Novi 
actually contained both lands to be included in the Pinedale Unit and lands 
outside of the unit and those leases were included on both Exhibit "A" and 
Exhibit "A-1."  Nothing in the Unit 
NPI Contract indicates the parties intended that, if the unit terminated, the 
NPI would cease to burden the portions of those leases originally within the 
unit, but continue to burden  the 
portions outside of the unit. 

 
 
[¶35]   Considering the entire transaction, 
which involved Novi's assignment of leases both in and out of the Pinedale Unit, 
it makes sense that the parties would refer to the leases committed to the unit 
in the Unit NPI Contract.  It does 
not, however, mean that the continuance of the unit was required in order for 
the NPI to remain a burden on the leases.  

 
 
[¶36]   Other provisions of the Unit NPI 
Contract confirm this reading of the Net Profits provision.  Initially, we note that throughout the 
Unit NPI Contract, the parties' obligations and benefits are in reference to the 
leases rather than to the unit.  In 
the "Computation" provision of the Unit NPI Contract, net profits were to be 
computed on the basis of all unit operations applicable to and allocable to the leases, not to all of 
the operations under the Pinedale Unit.  The defendants assert that, since unit 
operations were referenced in computing the NPI, the parties must have intended 
that the NPI would terminate if the Pinedale Unit no longer existed.  It is true that the Unit NPI Contract 
contemplated that unit operations pertaining to the leases would have to be 
considered in order to establish expenses and revenues and calculate the 
NPI.  However, the fact that the 
unit no longer exists does not prevent computation of the NPI.  The consolidated net profits applicable 
and allocable to the NPI leases can still be calculated whether or not any of 
the properties are unitized.  

 
 
[¶37]   The Unit NPI Contract limits the 
definition of "unit operations" for the purposes of the NPI as "all operations 
of any of First Parties under said leases."  This is significant because the unit 
could, and did, contain leases other than those subject to the NPI.  The Unit NPI Contract defined deductible 
expenses as those "which are properly chargeable against the leasehold 
interests."  This provision 
acknowledged that the unit existed and would incur expenses and revenues but 
specifically required that the NPI be calculated using only the revenues and 
expenses pertaining to the leases covered under the Unit NPI Contract.  If First Parties and Novi had intended 
that the NPI be conditioned on the leases' continued inclusion in the Pinedale 
Unit, the NPI would have been calculated under the provisions of the Pinedale 
Unit Agreement, using the entire unit, rather than the Unit NPI Contract which 
pertained to some, but not all, of the leases included in the unit.  

 
 
[¶38]   Moreover, under the "Logs and 
Information Relating to Production and Exploratory Work" provision of the Unit 
NPI Contract, Novi was entitled to information, not on the entire unit, but 
"whenever the expense of any such exploratory work is chargeable as an expense 
in computing net profits . . . ."  
In other words, Novi had the right to access information pertaining to 
the leases listed in Exhibit A to the Unit NPI Contract, but not to all leases 
within the unit.  That provision 
reinforces the parties' intent that the NPI obligation is not dependent on the 
leases' continued inclusion in the Pinedale Unit.  

 
 
[¶39]   The only provision of the Unit NPI 
Contract that speaks to termination of the NPI is the "Surrender" section. It is 
very significant that the surrender provision does not provide for termination 
of the NPI upon removal of the leases from the Pinedale Unit.  Although the First Parties were allowed 
to surrender leases which could then result in termination of the NPI, the 
contract specifically protected Novi's interest in several ways.   

 
 
            
As to . . . said leases as were acquired by First Parties from Novi, if 
First Parties desire at any time to surrender their . . . interest in such 
leases, . . . First Parties shall first offer . . . to transfer and assign the 
same to Novi.  Upon acceptance of 
such assignment, First Parties shall be relieved of any and all responsibility 
or liability hereunder with respect to the interest assigned . . . . 

 
 
The 
provision continues:

 
 
            
Notwithstanding any surrender, release or assignment of interest under 
the provisions of this section, Novi's net profits interest in operations 
relating to lands the leasehold interest in which is not so surrendered, 
released or assigned shall remain a 5% net profits interest.

 
 
By 
 providing that in the event of 
surrender of any of the Exhibit A leases, the NPI would continue on "operations 
relating to lands in which the leasehold interest is not so surrendered," this 
provision clearly attaches the NPI to the leases rather than to continuation in 
the unit.  

 
 
[¶40]   Another part of the Surrender 
provision provides:

 
 
In 
the event any lease is surrendered or released pursuant to the provisions of 
this section and thereafter First Parties, or any of them, obtain a lease 
covering lands the leasehold interest in which has been so surrendered, the 
interest so acquired or obtained by First Parties, or any of them, shall be 
subject to the provisions hereof, if such new lease is obtained within five (5) 
years from the date of any such surrender or release . . . . 

 
 
This 
is commonly known as an "anti-wash" provision.  Such provisions prevent a lessee from 
"washing" an encumbrance from a lease by acquiring it subject to an encumbrance 
tied to the lease, dropping the lease and then re-leasing the same property 
without the encumbrance.   The 
Surrender provision of the Unit NPI Contract indicates a clear intent that 
Novi's interest be protected in the face of the First Parties' right to 
unilaterally surrender leases which would, in effect, occur if the unit was 
contracted and/or terminated.  The 
application of the surrender and anti-wash provisions is discussed in more 
detail in Section III.D., below.  
That discussion about the replacement lease demonstrates very clearly 
that continuation of any particular lease in the unit was a voluntary and 
unilateral decision belonging to the First Parties and from which Novi intended 
its interest to be protected.  

 
 
[¶41]   These provisions reflect the 
reality that production units and their boundaries are temporary, whereas lease 
assignments are forever, and the operator, not the holder of an NPI, has control 
over the duration and configuration of the unit.  Under the terms of the Pinedale Unit 
Agreement, the working interest owners could terminate the unit if 75% of them 
(on an acreage basis) agreed to do so; Novi had no say in that decision.  If the net profits interest were 
contingent upon the continued existence of the Pinedale Unit, the First Parties 
could have terminated the unit at any time simply to "wash" the net profit 
interest.  That clearly would have 
been contrary to the intent of the Unit NPI Contract and Novi's purpose in 
entering into the assignment/net profit transaction.  The surrender provision would have been 
written much differently if the parties intended the NPI to terminate if the 
leases were no longer part of the Pinedale Unit.  

 
 
[¶42]   Considering that unitization, 
contraction, lease extension and reunitization are well known and valuable tools 
in retaining leaseholds and encouraging production, it is unreasonable to 
conclude that Novi would have intended that it could lose its valuable lease 
rights and the NPI simply because the First Parties decided to contract or 
terminate the Pinedale Unit.  Given 
that the Unit NPI Contract said nothing about termination of the Pinedale Unit 
leading to termination of the NPI, ascribing such intent to Novi would violate 
our rule against reading language into a contract and would be counter to 
assigning a rational and reasonable intent to contractual language.  Wadi Petroleum, ¶¶ 10-11, 65 P.3d  at 
708.  The logical view of the Unit 
NPI Contract is that Novi permanently gave up its leases in exchange for a 
permanent 5% NPI, not a temporary one.  
Thus, we agree with the district court's conclusion that the clear 
intention of the parties to the Unit NPI Contract was to encumber the leases 
identified in Exhibit A, regardless of whether the Pinedale Unit continued. 

 
 
[¶43]   The parties disagree over what 
extrinsic evidence of the circumstances surrounding the Unit NPI Contract should 
be considered in interpreting it.  
This Court has, for many years, stated that courts should consider the 
circumstances surrounding execution of an agreement, i.e., facts showing the 
parties' relationship, the subject matter of the contract, and the parties' 
apparent purpose in making the contract, to determine the parties' intention, 
even when reviewing unambiguous contracts.  
Mullinnix, ¶ 6, 126 P.3d  at 
915; Moncrief, 861 P.2d  at 524; Balch v. Arnold, 9 Wyo. 17, 29, 59 P. 434, 436 (1899).  In Boley v. Greenough, 2001 WY 47, ¶¶ 14-22, 22 P.3d 854, 858-60 (Wyo. 2001), we 
recognized the importance of interpreting contracts at the time and place of 
execution because the term "overriding royalty" used in a conveyance thirty 
years before had a different meaning than it did at the time of 
interpretation.  Parol evidence, 
which is distinguishable from extrinsic evidence, of the parties' intent is not, 
however, admissible if the contract is unambiguous.8  Wells Fargo, ¶ 31, 144 P.3d  at 412.  

 
 
[¶44]   Although the defendants dispute the 
appropriateness of considering some of the other agreements, they do argue the 
Area NPI Contract is a relevant fact or circumstance in this dispute without 
explanation of how that is consistent with their position that only the language 
of the Unit NPI Contract (and the associated unit agreement) can be considered 
to determine the parties' intent.  
Novi and First Parties entered into the Area NPI Contract, which had the 
same date as the Unit NPI Contract, to cover the portions of the Novi leases 
that were not to be included in the Pinedale Unit Agreement.  That agreement clearly ties the NPI to 
the leases and makes no reference to the Pinedale Unit.  The defendants argue that, considering 
the Area NPI Contract, the parties obviously knew how to draft a lease based NPI 
agreement and, because the Unit NPI Contract refers to the unit in terms of 
calculating the NPI  and 
identification of the leases covered under the agreement, they must have 
intended that the unit NPI remain only as long as the Pinedale Unit continued to 
exist.  

 
 
[¶45]   We agree with the district court 
and conclude just the oppositethe Area NPI Contract provides support for the 
district court's interpretation of the Unit NPI Contract.  The Area NPI Contract is nearly 
identical to the Unit NPI Contract, except there are no references to the unit 
and no allocation of unit revenues and expenses to particular leases in the 
former.  That difference recognizes 
the reality that calculation of the NPI while the Exhibit A leases were part of 
the Pinedale Unit required consideration of unit operations.  It would, however, be illogical to 
conclude that Novi and the First Parties intended that the NPI would attach 
permanently to the portion of the leases outside the unit but attach to the 
portions of the leases in the unit only so long as the First Parties 
unilaterally decided not to contract or terminate the unit and the defendants 
provide no explanation why the parties would have intended such a result. We 
conclude, therefore, the Area NPI Contract was properly considered as a relevant 
circumstance surrounding execution of the Unit NPI Contract and supports the 
district court's interpretation of such.  

 
 
[¶46]   The defendants then argue that the 
district court erroneously considered the Assignment Agreement and Supplemental 
Accounting Agreement in interpreting the Unit NPI Contract.  They claim that, since the Unit NPI 
Contract was unambiguous and did not expressly incorporate the Assignment 
Agreement or Supplemental Accounting Agreement, the district court should not 
have considered the other documents and they were, in fact, inadmissible parol 
evidence.  The defendants also 
suggest, although with little relevant discussion, that the Assignment Agreement 
should not be considered because its terms provided that it would no longer be 
effective after the leases had been assigned and the net profits contracts had 
been executed. 

 
 
[¶47]   We do not need to resolve the issue 
of whether the Assignment Agreement and Supplemental Accounting Agreement were 
properly considered by the district court because they simply provide further 
support for the plain language of the Unit NPI Contract.  The Assignment Agreement provided a 
roadmap of the ensuing transactions, which culminated in the Unit NPI Contract, 
Area NPI Contract and lease assignments.  
It is significant that the agreement did not differentiate between the 
NPI that would be created in the Unit NPI Contract and the NPI that would be 
created in the Area NPI Contract.  
The Supplemental Accounting Agreement provides for accounting between 
First Parties on a lease by lease basis.   

 
 
[¶48]   With or without consideration of 
the two disputed agreements, we would arrive at the same result as the district 
court didthe Unit NPI Contract was clear and unambiguous and the NPI continued 
to encumber the relevant leases after contraction and/or termination of the 
Pinedale Unit.9  The district court properly granted 
summary judgment in the plaintiffs' favor on this issue. 

 
 
C.        Were 
the plaintiffs entitled to summary judgment on the question of whether they own 
the NPI?

 
 
[¶49]   In their amended complaint the 
plaintiffs requested a declaration that they "are the owners of the NPI as 
alleged and are entitled to payment of the NPI and an accounting thereof by the 
Group A defendants from operations" under the leases.  It is fair to say that initially the 
defendants' resistance to paying the plaintiffs was based largely on their 
argument that the NPI had terminated with the Pinedale Unit.  Nevertheless, the plaintiffs sought a 
declaration in their second motion for summary judgment that they were the 
owners of the NPI.  Their motion and 
the accompanying memorandum contained an extensive review of the series of mesne 
conveyances through which they claimed ownership of the NPI.  In response, the defendants conducted 
their own review of the title of the NPI.  
None of the defendants, however, claimed they owned the NPI.    

 
 
[¶50]   The district court reviewed the 
conveyances and concluded, as a matter of law, plaintiffs owned the NPI.  The defendants appealed that 
determination and the plaintiffs argue, on appeal, that the defendants do not 
have standing to challenge the district court's conclusion that they own the 
NPI.  

 
 
            
"Standing" is short for "standing to sue," which requires a "legally 
protectable and tangible interest at stake in the litigation."  Olsten Staffing Servs., Inc. v. D.A. Stinger 
Servs., Inc., 921 P.2d 596, 
599 (Wyo. 1996) (quoting Black's Law 
Dictionary 1405 (6th ed. 1990)).  
The phrase "tangible interest" has been equated with the phrase "personal 
stake in the outcome."  Goshen Irrigation Dist. v. Wyo. State. Bd. 
Of Control, 926 P.2d 943, 
947 (Wyo. 1996); State ex rel. Bayou 
Liquors, Inc. v. City of Casper, 906 P.2d 1046, 1048 (Wyo. 
1995).  The person alleging standing 
must show a "perceptible," rather than a "speculative" harm from the action; a 
remote possibility of injury is not sufficient to confer standing.  Sinclair Oil Corp. v. Wyo. PSC, 2003 WY 22, ¶ 13, 63 P.3d 887, 894-95 (Wyo. 2003).

 
 

Halliburton 
Energy Serv., Inc. v. Gunter, 
2007 WY 151, ¶ 11, 167 P.3d 645, 649 (Wyo. 2007).  Standing is a jurisdictional issue, 
involving a question of law that may be raised at any time, and is reviewed de novo.  Hicks v. Dowd, 2007 WY 74, ¶ 18, 157 P.3d 914, 918 
(Wyo. 2007).  The standing issue was 
raised in the plaintiffs' consolidated brief in cases S-08-0258 through 0261. 
 Without citation to any authority, 
the plaintiffs make the following argument:

 
 
          
  Defendants have no standing 
to contest ownership.  They concede 
on appeal that they have now been furnished with legal evidence of plaintiffs' 
ownership.  No other party claims 
any ownership of the NPI.  The 
district court's Judgment settled any "ownership dispute" and provides 
defendants with protection from multiple claims for payment.  Yet, defendants contest plaintiffs' NPI 
ownership.  They do so in order to 
extinguish the NPI, not because they are accounting to or paying net profits to 
some other party or expect to do so. 

 
 
It 
seems odd that the plaintiffs would contest the standing of the defendants to 
appeal a trial court ruling on a claim that was raised by the plaintiffs against 
the defendants.  However, the 
plaintiffs' argument does alert us to a related issue.  

 
 
[¶51]   In any declaratory judgment action, 
the plaintiff must allege a justiciable controversy which requires, among other 
things, a showing that the parties before the court have a genuine interest in 
the dispute and the proceedings are truly adverse in nature.  See, Brimmer v. Thomson, 521 P.2d 574, 578 (Wyo. 1974) and 
its progeny.  The necessity of 
showing an actual controversy is recognized in the elements of claims for 
declaration of ownership of property, whether real or personal.  In a claim for declaration of ownership 
of personal property, i.e., conversion, the plaintiff must allege that the 
defendant is exercising dominion over the plaintiff's property.  Ferguson, 884 P.2d  at 975.  In a claim for declaration of ownership 
of real property, i.e., quiet title, the plaintiff must allege an interest in 
the real property and the defendant "claims an estate or interest adverse to 
him."  Wyo. Stat. Ann. § 1-32-201 
(LexisNexis 2009).  See also, Bamforth v. Ihmsen, 28 Wyo. 282, 296, 204 P. 345, 352 (1922) (stating 
plaintiff has "the right to bring an action to quiet title against a party 
making an adverse claim thereto").

  

[¶52]   A Washington court of appeals 
recognized that one cannot bring an action for declaration of title to property 
against someone who does not claim a right to the property.  Ruvalcaba v. Kwang Ho Baek, 2007 WL 
2411691, No. S8877-0-I at 1 (Wash. Ct. App., Aug. 27, 2007).  The court stated that a complaint 
brought by the plaintiff "against strangers to the severed property" failed to 
state a claim upon which relief could be granted.  The same concept is stated in other 
contexts.   For example, a 
Hawaiian court held that a defendant cannot set up title in a stranger to the 
litigation to defeat a plaintiff's quiet title claim.  See, e.g., Hana Ranch, Inc. v. Kanakaole, 623 P.2d 885, 888 (Haw. Ct. App. 1981).  
Similarly, Missouri courts have repeatedly stated 
that:

 
 
The 
trial court in a quiet title action must "ascertain and determine the rights of 
the parties under the pleadings and evidence, grant such relief as may be proper 
and determine the better' title, as between the parties to the proceeding, 
though a title superior to the rights of either party may be held by a 
stranger."  

 
 

Manard 
v. Williams, 952 S.W.2d 387, 389-90 (Mo. Ct. App. 1997), quoting Robertson v. North Inter-River Drainage 
Dist., 842 S.W.2d 544, 546 (Mo. App. 1992).  See also, Pitts v. Pitts, 388 S.W.2d 337, 339 (Mo. 
1965).  

 
 
[¶53]   Any declaration by the court in 
this case as to the superiority of plaintiffs' title to defendants' title would 
have no effect since the defendants did not claim title to the NPI and others 
who may assert an interest in the NPI would not be bound by the declaration 
because they were not represented in the case.  Stated yet another way, "a mere stranger 
to the title cannot complain about a cloud upon the title." McVey v. Unknown Shareholders of Inland Coal 
and Washing Co., 427 N.E.2d 215, 218 (Ill. Ct. App. 1981).  Thus, a defendant can only assert his 
own title; if he does not make a claim to title, there is no dispute to 
adjudicate.  Although not directly 
on point, we think that the concepts announced by this Court in Mountain West Farm Bureau Mut. Ins. Co. v. 
Hallmark Ins. Co., 561 P.2d 706, 710 (Wyo. 1977) are applicable here.  "It is well settled that in no case can 
a stranger to a contract maintain an action upon it."  Nowhere in the record do the defendants 
claim that they had somehow acquired ownership of the NPI, and no other party 
claimed ownership adverse to the plaintiffs.  

 
 
[¶54]   Given that we have affirmed the 
district court's ruling that the NPI continued after termination of the Pinedale 
Unit, someone owns the interest.  
The district court stated in its order on the plaintiffs' second motion 
for summary judgment:  

 
 
It 
is significant that no other person or entity [besides the plaintiffs] has 
stepped forward to claim the net profits interest or any portion thereof.  The Defendants do not and cannot claim 
ownership of the net profits interest and maintain that it ceased to exist with 
the termination of the Pinedale Unit. 

  

The 
true issue involving the plaintiffs' title was whether they gave sufficient 
notice of their ownership of the NPI to the defendants, as required by the Unit 
NPI Contract, to entitle them to payment.  
Once the plaintiffs satisfied that requirement, the defendants had no 
further right to challenge ownership of the NPI.  

 
 
[¶55]   The plaintiffs provided evidence of 
the mesne conveyances that transferred title of the NPI from Novi and, 
ultimately, to them.  After 
execution of the NPI contracts, Novi merged into Woodson Oil Company 
(Woodson).  Woodson then defaulted 
on a debt to Prudential Insurance Company (Prudential) and, to cancel the 
indebtedness, conveyed a large package of properties in several states, 
including the NPI, to Prudential.  
Prudential conveyed the "Woodson properties" to Texas Pacific Coal & 
Oil Company (TP Coal), reserving among other things, 50% of the net profits 
realized from operations on the Woodson properties (referred to as the "Net 
Profit Overriding Royalty").  Prudential ultimately conveyed its Net 
Profit Overriding Royalty to Plaintiffs in 1984.  Plaintiffs claimed that they acquired a 
50% interest in the NPI through the Prudential conveyance.    

 
 
[¶56]   The plaintiffs maintained that they 
acquired the rest of the NPI through the TP Coal chain of title.  After acquiring the "Woodson properties" 
from Prudential, TP Coal transferred all of its rights in any county or state 
referenced in an attached exhibit, including Sublette County, Wyoming, to Joseph 
E. Seagram & Sons, Inc. (Seagram) in 1963.  The conveyance included specific 
reference to a net profits interest in four Sublette County leases.  In 1970, Seagram executed a document 
transferring its Sublette County interests, including the four Sublette County 
leases, to Texas Pacific Oil Company (TP Oil).  A subsequent conveyance from Seagram to 
TP Oil in 1980, clarified that Seagram intended to transfer all of its "right, 
title, interest and estate of every nature and description . . . which were 
acquired from [TP Coal] . . . covering lands located within the United States" 
to TP Oil.  TP Oil thereafter 
transferred all of its interests in the United States to Sun Oil Company (Sun). 
 TP Oil also executed a supplemental 
conveyance to Sun, specifically identifying the aforementioned four Sublette 
County leases.  In 1986, Sun 
transferred to plaintiffs the NPI obtained from TP Oil.         

 
 
[¶57]   The defendants' objections to the 
plaintiffs' chain of title pertain to whether the title or contractual rights to 
the NPI were effectively passed in various conveyances.  First, they argue that the plaintiffs 
did not acquire any part of the NPI through Prudential because Prudential "sold 
all of its interest in the NPI" to TP Coal.  This argument is a red herring.  Even if we assume that the defendants' 
position is true, it does nothing to further their case because if Prudential 
did not reserve any of the NPI, then it all passed to TP Coal and would have 
been conveyed through that succession to plaintiffs.  As such, the defendants' argument as to 
the validity of the Prudential conveyance does not in any way affect their 
obligation to pay the NPI to the plaintiffs.  

 
 
[¶58]   The defendants also challenge three 
of the mesne conveyances in the TP Coal/Sun chain, specifically the TP Coal to 
Seagram transfer, the Seagram to TP Oil transfer, and the TP Oil to Sun 
transfer.  The defendants claim 
that, at most, those conveyances transferred an interest in the four listed 
Sublette County leases.  The 
defendants' arguments are not convincing because the following immutable facts 
establish plaintiffs' right to payment of the NPI: 1) the NPI continues to 
exist, so, obviously, someone owns it; 2) the defendants do not own it; 3) if 
the conveyances were not sufficient to pass ownership of the NPI to the 
plaintiffs, then it would remain with the grantors; 4) the conveyances 
questioned by the defendants purported to transfer all of the grantors' 
interests even though they also listed specific interests and did not contain 
any express reservation of ownership of the NPI interest by any of plaintiffs' 
grantor(s); and 5) although they question the efficacy of certain conveyances, 
defendants do not point to any particular predecessor in plaintiffs' chain of 
title as having a current, valid claim of ownership.10  Moreover, it is significant, given the 
amount of money and time involved in these proceedings, that no predecessor in 
the plaintiffs' chain of title has come forward to claim that it owns part or 
all of the NPI.  Thus, there are no 
adverse claims to plaintiffs' right to the NPI and the defendants run no risk of 
being subject to multiple claims to the interest.11  To the extent that the district court's 
summary judgment stated that the plaintiffs had provided a sufficient showing of 
their right to payment under the NPI, we affirm it.  However, to the extent that it was 
intended to quiet title to the plaintiffs against any claims by others who are 
not parties to this action, we conclude that there was no justiciable 
controversy and reverse. 

 
 
II.  Rulings as a Matter of Law Under Rule 
52(c)

 
 
A.        
Standard of review

 
 
[¶59]   Wyoming Rule of Civil Procedure 
52(c) allows the district court to enter judgment during a bench trial if, after 
the plaintiffs have presented all of their evidence, the court determines the 
claim cannot be maintained under the controlling principles of law.  A Rule 52(c) motion is similar to a 
motion for judgment as a matter of law in a jury trial under W.R.C.P. 
50(a)(1).  We review an order 
granting judgment as a matter of law under Rule 50(a)(1) de novo, giving no deference to the 
district court's decision.  Conner v. Bd. of Co. Comm'rs, Natrona 
Co., 2002 WY 148, ¶ 8, 54 P.3d 1274, 1279 (Wyo. 
2002).  A district court's Rule 
52(c) order granting judgment on partial findings is evaluated using the same 
standard.  Hutchinson v. Taft, 2010 WY 5, ¶ 12, 222 P.3d 1250, 
1253 (Wyo. 2010).  

 
 
[¶60]   We regard the plaintiffs' evidence 
as true and afford it all favorable and reasonable inferences.  Mountain View/Evergreen Improv. and Serv. 
Dist. v. Casper Concrete Co., 912 P.2d 529, 531 (Wyo. 1996).  When the plaintiffs' proof has failed in 
some aspect, the motion is properly granted; however, when the plaintiffs have 
presented a prima facie case, the motion is properly denied.  Hutchinson, ¶ 12, 222 P.3d  at 1253.  

 
 
B. 
       Did 
the district court err by granting the defendants' Rule 52(c) motion regarding 
the plaintiffs' duty to provide proof of their ownership of the NPI under 
Section 5 of the Unit NPI Contract or by determining that the plaintiffs gave 
sufficient notice of their ownership in Mr. Hartman's February 22, 2006, 
letter?  

 
 
[¶61]   The district court determined that 
the relevant leases began generating net profits in May 2005.  It ruled, however, that Section 5 of the 
Unit NPI Contract required the plaintiffs to give notice of their ownership 
before defendants were obligated to pay the net profits.  The court also concluded, as a matter of 
law, that the plaintiffs gave the required notice in Mr. Hartman's February 22, 
2006, letter, triggering the defendants' obligation to pay beginning in March 
2006.  On appeal, the plaintiffs 
claim, under the Unit NPI Contract and the WRPA, they are entitled to payment of 
net profits for the entire time the leases were profitable.  Defendants, on the other hand, maintain 
that the plaintiffs did not give sufficient notice of their ownership until they 
provided the actual conveyance documents in July 2006, and therefore were not 
entitled to payment of the NPI until August 2006.   

 
 
[¶62]   The relevant provision of the Unit 
NPI Contract states:

 
 
            
5.  TRANSFER 

 
 
            
Operator shall not be required to take cognizance of any deed, 
assignment, transfer or passing of title by will, testament or inheritance of 
said net profits interest, or any interest therein, unless and until Operator 
shall have been furnished with legal evidence of such deed, assignment, transfer 
or passing of title by will, testament or inheritance which is acceptable to 
Operator. . . .  In no event shall 
Operator be liable hereunder to any successor in interest of Novi or its 
successors for all or any part of said overriding royalty until after Operator 
has been furnished with proof of interest or notice of adverse claim of such 
successor in interest, and then only for payments accruing after the first day 
of the following calendar month.  In 
the event of any dispute at any time concerning the ownership of any net profits 
interest payable hereunder, Operator may withhold payment of such net profits 
interest or any part thereof of the amount in dispute without interest until 
such dispute is settled.

 
 
[¶63]   The district court orally ruled on 
the defendants' Rule 52(c) motions during trial and also included written 
rulings on the motions in its bench trial order.  With regard to the notice issue, the 
district court stated:

 
 
FINDINGS 
OF FACT

 
 
36.       Section 5 
affords protection to the First Parties in two distinct circumstances.  The first is a lack of notice to the 
operator of a transfer of all or any portion of the NPI to a third party.  In this circumstance, the First Parties 
are protected from multiple claims and unknown claims by the language of Section 
5 that provides the operator is not liable for any payment until furnished proof 
of ownership and only then for payments accruing after the first day of the 
following calendar month.

 
 
            
37.       
The second circumstance involves competing claims for the same interest 
or portion thereof, i.e. an ownership dispute.  In that circumstance, Section 5 provides 
that the operator may withhold payment of the NPI in dispute, without interest, 
until the dispute is settled. 

 
 
            
38.       
There is no language in Section 5 that authorizes the First Parties to 
avoid their respective obligations to account and pay in this case.

 
 
            
39.       
It is true that the defendants vigorously contest the plaintiffs' chain 
of title and ownership of the NPI.  
The Court has previously decided that issue in plaintiffs' favor.

 
 
            
40.       
However, the defendants' primary contention is that the NPI terminated 
along with the Pinedale Unit, simply no longer existed, and therefore, the 
obligation to account and pay no longer exists.  In essence, the defendants seek refuge 
in a provision of a contract they claim no longer has force.

 
 
            
41.       
On February 22, 2006, Doyle Hartman sent a letter requesting an 
accounting and payment of the NPI.  
Exhibit E19.  The addressees 
included Ultra, [Shell], SWEPI, [Arrowhead], Lance and Williams.  The letter was accompanied by eleven 
extensive attachments, including a chronological chain of title.  The chain of title reflected twenty-two 
detailed entries by instrument date, description and recordation establishing 
the plaintiffs as the successor owners of the NPI.  Defendants were thereby furnished with 
the plaintiffs' proof of interest in satisfaction of Section 5 of the Net 
Profits Contract.  The letter of 
February 22, 2006 was adequate notice under Section 5 of the Net Profits 
Contract of the plaintiffs' ownership interest.

 
 
            
42.       
4.98% of the net profits for the period March  December 2006, on 
consolidated accounting including State Lease 79-0645, SCPPA and Haliburton is 
$4,896,589.

 
 
CONCLUSIONS 
OF LAW

 

            
87.       
Section 5 of the Net Profits Contract precludes plaintiffs from 
recovering net profits realized before March 2006 (the February 22, 2006 Hartman 
letter marking the date the operators were first furnished with proof of the 
interest).  However, defendants also 
cite to the portion of § 30-5-301(a) of the WRPA reading "unless other periods 
or arrangements for the first and subsequent payments are provided for in a 
valid contract with the person or persons entitled to such proceeds."  

 
 
            
88.       
The plaintiffs contend that this result would thwart the public policy 
and remedial nature of the WRPA by allowing the defendants to retain net profits 
accumulated prior to March 2006, profits the plaintiffs contend the defendants 
are not entitled to or do not own.  
The language of Section 5 of the Net Profits Contract compels a different 
result.  The plaintiffs were simply 
not entitled to receive net profits until they had complied with the notice 
provisions of Section 5. 

 
 
            
89.  However, the "unless 
other periods or arrangements . . ." language in § 30-5-301(a) refers to the 
timing of payment, not the amount of payment.  By the language of Section 5 of the Net 
Profits Contract, the defendants were not obligated to pay net profits until 
March 2006.  Under the contract and 
the WRPA, the defendants had a duty to account for and pay net profits as soon 
as practicable commencing March 2006 and, if there were a reason payment could 
not be made, deposit the funds in an escrow account.

            

[¶64]   Starting with Section 5 of the Unit 
NPI Contract, plaintiffs claim that the purpose of that provision was to allow 
the First Parties to withhold payment of the NPI in the face of competing claims 
to protect them from being forced to make duplicate payments.  They insist that, since there were no 
competing claims to the NPI, the defendants were obligated to pay the NPI for 
the entire time the leases were profitable.  

 
 
[¶65]   It is true that much of Section 5 
is concerned with competing claims for ownership of the NPI; however, the 
provision also expressly states:  
"In no event shall Operator be liable hereunder to any successor in 
interest of Novi or its successors for all or any part of said overriding 
royalty until after Operator has been furnished with proof of interest or notice 
of adverse claim . . .  and then 
only for payments accruing after the first day of the following calendar 
month."  This language could not be 
any clearer.  The plain language of 
this provision does not limit its application to instances of competing 
claims.  The use of the alternates 
"proof of notice or adverse claims" confirms that there are two different 
scenarios where the non-liability provision applieswhen the new owner has not 
provided proof of his interest and when there is no notice of an adverse 
claim.  Novi and First Parties could 
have limited application of the provision to cases of competing claims but they 
did not.  The parties to the Unit 
NPI Contract used the mandatory language "in no event" to elucidate the 
compulsory notice requirement.  If 
we were to interpret Section 5 as advocated by the plaintiffs, we would have to 
disregard that clear, mandatory language.   

 
 
[¶66]   In addition, the provision stating 
that the operator would only be responsible for payments accruing after the 
first day of the month following sufficient notice indicates that the payment 
obligation is not triggered until such notice is given.  Obviously, there will always be someone 
with title to the interest, and, once title has passed, the predecessor no 
longer has a right to receive the NPI payment.  The parties to the Unit NPI Contract 
could have stated that the First Parties' obligation to pay the successor would 
accrue upon passing of the title, thereby insuring there would be no gaps in the 
payment obligation.  They did not 
adopt such an obligation but, instead, stated that no payment was due until the 
month after sufficient notice was given.  
This provision refutes the plaintiffs' claim that the parties did not 
intend that the operator be able to avoid payment in the event of insufficient 
or delayed notice.  

 
 
[¶67]   We discern a valid purpose in 
requiring the owner of the NPI to come forward prior to triggering the payment 
obligation.  This case dramatically 
demonstrates how complex issues of title and accounting can be in the context of 
mineral interests.  A great deal of 
unnecessary effort and costs to the operator could be avoided by simply 
requiring the NPI owner to give notice of his interest prior to generating the 
payment obligation.  We agree with 
the defendants and the district court that the clear language of the Unit NPI 
Contract protected the operators from liability prior to receiving notice of the 
plaintiffs' interests.  

 
 
[¶68]   Plaintiffs also argue that the WRPA 
prohibited the defendants from disregarding their obligation to pay the 
NPI.  Before we analyze the precise 
issue presented, we will provide a brief overview of our statutory 
interpretation rules and the WRPA.

 
 
[¶69]   This Court interprets statutes to 
effectuate the legislature's intent.  
When the wording is clear and unambiguous, we give effect to the plain 
language of the statute. The rules of statutory construction apply only if the 
statutory language is ambiguous or subject to varying interpretations.  
Statutory interpretation is a question of law, reviewed de novo. Cook 
v. Swires, 2009 WY 21, ¶ 17, 202 P.3d 397, 402 
(Wyo. 2009); Chevron U.S.A., Inc. v. Dep't of Revenue, 2007 WY 43, ¶¶ 9-10, 13, 154 P.3d 331, 334-35 (Wyo. 2007). 

 
 
[¶70]   The WRPA is intended to "stop oil 
[and gas] producers from retaining other people's money for their own use.'" Cities Service Oil & Gas Corp. v. State, 
838 P.2d 146, 156 (Wyo. 
1992), quoting Independent Producers 
Marketing Corp. v. Cobb, 721 P.2d 1106, 1110 (Wyo. 1986).   
See also, Cabot Oil & Gas Corp. v. Followill, 
2004 WY 80, ¶ 10, 93 P.3d 238, 242 (Wyo. 2004).   As such, the WRPA is intended to 
be remedial and is liberally construed.  
Ferguson, 884 P.2d  at 979.

 
 
[¶71]   The act takes effect when the 
lessee discovers a royalty payment deficiency.  Cities Services, 838 P.2d  at 157.  It provides deadlines for payments of 
royalties to persons "legally entitled" to such payments, although the parties 
may by contract provide for other "arrangements for first and subsequent 
payments."  The act also requires 
the appropriate parties to provide royalty information to the royalty or other 
interest owners in accordance with the statutes.  Section 30-5-301(a); Section 
30-5-305(b).  Under the WRPA, a 
party obligated to make a payment is liable for 18% interest on payments not 
made in accordance with the act.  
Section 30-5-303(a).  There 
is, however, a good faith exception included in § 30-5-302 which allows a party 
legally obligated to pay a royalty to escrow the funds until a determination is 
made as to who is legally entitled to payment.  Section 30-5-303(b) and (c) also provide 
that the prevailing party in any proceedings brought under the act is entitled 
to attorney fees and costs and provides a penalty of  $100 per month for failing to provide 
complete reporting to the interest owner. 

 
 
[¶72]   We recognized that the WRPA applies 
to net profit interests in Ferguson, 
884 P.2d  at 979.  The plaintiffs 
claim, therefore, that the WRPA obligated the defendants to pay them all net 
profits, even those that accrued before they provided notice of their 
interest.  They rely on the 
following provisions:

 
 
            
The proceeds derived from the sale of production from any well producing 
oil, gas or related hydrocarbons in the state of Wyoming shall be paid to all 
persons legally entitled thereto, except as hereinafter provided, commencing not 
later than six (6) months after the first day of the month following the date of 
first sale and thereafter not later than sixty (60) days after the end of the 
calendar month within which subsequent production is sold, unless other periods 
or arrangements for the first and subsequent payments are provided for in a 
valid contract with the person or persons entitled to such proceeds. Payment 
shall be made directly to the person or persons entitled thereto by the lessee 
or operator or by any party who assumes such payment obligation under any legal 
arrangement.

    

Section 
30-5-301(a).

 
 
            
Any delay in determining any person legally entitled to an interest in 
the proceeds from production shall not affect payments to all other persons 
entitled to payment. In instances where payment cannot be made for any reason 
within the time limits specified in W.S. 30-5-301(a), the lessee or operator, 
purchaser or other party legally responsible for payment shall deposit all 
proceeds credited to the eventual interest owner to an escrow account . . .  Payment of principal and accrued 
interest from such accounts shall be paid by the escrow agent to all persons 
legally entitled thereto within thirty (30) days from the date of receipt by the 
escrow agent of final legal determination of entitlement thereto. 

 
 
Section 
30-5-302.  

 

 
[¶73]   The WRPA does not provide a remedy 
to plaintiffs in this instance because the person seeking protection of the act 
must be "legally entitled" to the payment.  
Here, the plaintiffs were not "legally entitled" to payment of the NPI 
until they provided the notice required by Section 5 of the Unit NPI 
Contract.  The Court cannot change 
the parties' agreement by "liberally" construing the WRPA.  The district court properly concluded, as 
a matter of law, that under the Unit NPI Contract the plaintiffs were obligated 
to provide sufficient notice of their ownership to the operator before they were 
entitled to payment of the NPI and the WRPA did not change that 
responsibility.  

 
 
[¶74]   We turn, now, to the question of 
the sufficiency of plaintiffs' notice.  
Under Section 5 of the Unit NPI Contract, the plaintiffs were entitled to 
payments accruing after the first day of the calendar month following notice to the defendants. In 
particular, Section 5 states that "Operator shall not be required to take 
cognizance of any deed, assignment, transfer . . . of said net profit interest . 
. .  unless and until Operator shall 
have been furnished with legal evidence of such deed, assignment, 
transfer or passing of title by will, testament or inheritance which is 
acceptable to Operator," and  "[i]n 
no event shall Operator be liable hereunder to any successor in interest of Novi 
or its successors for all or any part of said overriding royalty until after 
Operator has been furnished with proof of interest."  (Emphasis added).    

 
 
[¶75]   Plaintiff Doyle Hartman sent a 
letter dated February 22, 2006, to the defendants. The letter, admitted into 
evidence at the trial, outlined the requirements of the Unit NPI Contract and 
summarized the conveyances that resulted in plaintiffs' ownership of the 
NPI.  Mr. Hartman attached 
eighty-four pages of documentation to his letter, including a chronological 
chain of title which referenced all of the conveyance documents; BLM documents; 
and a title opinion recognizing the title transfer.  The district court determined that the 
plaintiffs' February 22, 2006, letter provided sufficient notice of their 
ownership of the NPI, thereby entitling them to payment commencing March 1, 
2006.      

 
 
[¶76]   The defendants maintain on appeal 
that the district court's determination that Mr. Hartman's letter was sufficient 
notice of the plaintiffs' interest was erroneous because the letter did not 
contain copies of the actual transfer documents.  They claim that the "legal evidence" 
required by the Unit NPI Contract was not presented by the plaintiffs until July 
2006 when they provided the actual conveyances showing their chain of 
title.    

 
 
[¶77]   The defendants direct us to some 
cases they argue support their assertion that the "legal evidence" of title 
could only be established by providing the actual conveyance documents to the 
operators.  Olsen v. Olsen (In re Estate of Olsen), 
579 N.W.2d 529, 531-32 (Neb. 1998), involved questions of title to interests 
in real property, and the court ruled that the conveyance instrument is the best 
evidence of title. We certainly have no quarrel with that statement of law in 
the context of litigation.  However, 
Section 5 does not state that the evidence provided by the successor must be the 
best evidence or otherwise admissible in court.  The defendants also cite to Lapeze v. Amoco Prod. Co., 842 F.2d 132 
(5th Cir. 1988), in support of their argument that Mr. Hartman's 
letter was insufficient notice of the plaintiffs' ownership of the NPI.  In that case, the court simply held that 
the notification provisions of the parties' contract, which required a certified 
copy of the recorded instrument, had to be met before the lessee was required to 
make payments to a successor lessor.  
We agree with the general principle that the contract controls the 
notification requirement.  

 
 
[¶78]   Section 5 states that the successor 
must furnish "legal evidence" of the change of ownership acceptable to the 
operator and "proof of interest."  
While the section lists types of evidence of transfer (like deeds and 
assignments), it does not specifically state that the actual conveyance 
documents must be provided to the operator.  Mr. Hartman's February 22, 2006, letter 
identified the relevant transactions and provided grantors/grantees, dates of 
conveyances and recording information.  
That information unquestionably placed the operators on notice as to the 
plaintiffs' asserted chain of title.  

 
 
[¶79]   Section 5 also states that the 
evidence must be acceptable to the operator.  Mr. Hartman testified that the operators 
did not respond to his letter by requesting additional information about the 
plaintiffs' title,12 and the defendants do not 
direct us to any evidence indicating that the operators asked for additional 
information pursuant to Section 5's "operator's approval" provision after 
receiving Mr. Hartman's letter.  The 
defendants' failure to request additional documentation serves to distinguish 
this situation from Lee v. Gulf Oil Expl. 
and Prod. Co., 318 N.W.2d 766 (N.D. 1982), another case cited by 
defendants.  In Lee, the North Dakota Supreme Court 
concluded that Gulf was not required to take cognizance of the transfer of an 
interest because the transferee had not provided recorded deeds after Gulf 
requested them.  

 
 
[¶80]   Under the circumstances presented 
here, the district court properly concluded, as a matter of law under Rule 
52(c), Mr. Hartman's letter provided sufficient notice of the plaintiffs' 
ownership of the NPI.  Given there 
is no indication that the operators asked for additional documentation to 
satisfy the Unit NPI Contract Section 5 requirement, the plaintiffs were not 
obligated to provide the actual conveyance documents.  

 
 
[¶81]   In a related matter, defendants 
argue that the district court's finding of fact number 32 contravened its Rule 
52 order dismissing the plaintiffs' claims for the period prior to March 1, 
2006.  Finding of Fact No. 32 
stated:

 
 
            
32.       
The 5% net profits as calculated under the leases subject to the NPI for 
the period May 2005  December 2006, on consolidated accounting including SCPPA 
and Haliburton is $21,030,564.  

 
 
The 
defendants claim that they tailored their evidence to the post February 2006 
period after the district court announced its Rule 52(c) order and, therefore, 
were not given a sufficient opportunity to litigate the NPI amounts for the time 
prior to that period.  

 
 
[¶82]   Considering our ruling that the 
district court properly determined that the NPI payment obligation did not 
accrue until March 1, 2006, we fail to see how the defendants were prejudiced by 
the district court's finding as to the amount generated by the NPI from May 
2005, when profits first accrued, through December 2006, the last date for which 
accounting evidence was available or offered.  The district court did not state that 
the defendants were responsible for paying the pre-March 2006 net profits.  It simply made a ruling as to the amount 
accrued under the NPI for the entire period of profitability to provide context 
for the rest of its findings, including its determination of the amount due on 
the NPI from March 2006, through December 2006.  Even if we assume the defendants were 
not given a sufficient opportunity to present net profits evidence pertaining to 
the period prior to March 1, 2006, we hold that any error was harmless.  W.R.A.P. 9.04 directs us to disregard 
"[a]ny error, defect, irregularity or variance which does not affect substantial 
rights."

 
 
C.        Did the district 
court err in granting the defendants' Rule 52(c) motion on the plaintiffs' claim 
for breach of the implied covenant of good faith and fair 
dealing?

 
 
[¶83]   The plaintiffs asserted a claim for 
breach of the covenant of good faith and fair dealing implied in the Unit NPI 
Contract.  After the plaintiffs 
rested, the defendants moved for judgment as a matter of law under Rule 52(c) on 
that claim.  The district court 
granted the defendants' motion, ruling that the defendants' legal position 
regarding the Unit NPI Contract was not arbitrary or unreasonable and the 
plaintiffs did not present a prima facie case that the defendants acted in bad 
faith.  On appeal, the plaintiffs 
argue the district court's ruling was erroneous.   

 
 
[¶84]   This Court recognized that parties 
to a commercial contract may assert a claim for breach of the covenant of good 
faith and fair dealing based upon a contract theory13 in  Scherer Constr., LLC v. Hedquist Constr., 
Inc., 2001 WY 23, ¶ 24, 18 P.3d 645, 655 (Wyo. 2001).  Restatement (Second) of Contracts § 205 
(1981) states the general principle: "Every contract imposes upon each party a 
duty of good faith and fair dealing in its performance and enforcement."  We have determined that "the implied 
covenant requires that neither party to a commercial contract act in a manner 
that would injure the rights of the other party to receive the benefit of the 
agreement."  City of Gillette v. Hladky Constr., Inc., 
2008 WY 134, ¶ 30, 196 P.3d 184, 196 (Wyo. 2008).  A party breaches the covenant by 
interfering or failing to cooperate in the other party's performance under the 
contract.  Scherer, ¶ 19, 18 P.3d  at 653.   

 
 
[¶85]   As we explained in Whitlock Constr., Inc. v. South Big Horn 
County Water Supply Joint Powers Bd., 2002 WY 36, ¶ 24, 41 P.3d 1261, 1267 (Wyo. 2002), 
quoting Scherer, ¶ 29, 18 P.3d  at 653-54  (internal quotes and citations omitted), 
the implied covenant of good faith and fair dealing  

 
 
requires 
that a party's actions be consistent with the agreed common purpose and 
justified expectations of the other party. . . . The purpose, intentions and 
expectations of the parties should be determined by considering the contract 
language and the course of dealings between and conduct of the parties. The 
covenant of good faith and fair dealing may not, however, be construed to 
establish new, independent rights or duties not agreed upon by the parties. In 
other words, the concept of good faith and fair dealing is not a limitless one. 
The implied obligation must arise from the language used or it must be 
indispensable to effectuate the intention of the parties. In the absence of 
evidence of self-dealing or breach of community standards of decency, fairness 
and reasonableness, the exercise of contractual rights alone will not be 
considered a breach of the covenant.

 
 
Although 
we recognized that resolution of a bad faith claim will generally involve a 
factual inquiry, a  party is 
entitled to a judgment as a matter of law "if, under the facts in the record, 
the party's actions alleged as a basis for the breach of the implied covenant 
were in conformity with the clear language of the contract."  Scherer, ¶ 19 n.2, 18 P.3d  at 654 n.2.

 
 
[¶86]   The plaintiffs' argument generally 
focuses upon the defendants' actions before Mr. Hartman's February 22, 2006, 
letter advising them of the plaintiffs' interest.  They state that the defendants violated 
their obligations under the Unit NPI Contract to account, pay or escrow funds 
for net profits and to acknowledge or investigate the ownership of the NPI.  Our affirmance of the district court's 
ruling regarding the plaintiffs' obligation to give defendants notice of their 
interest before their right to net profits payment accrued resolves much of the 
bad faith claim.  As we stated in 
Section II.B., the plaintiffs had an affirmative duty to come forward with proof 
of their ownership of the interest.  
The contract did not impose upon the defendants an affirmative duty to 
search for the NPI owner.

 
 
[¶87]   The facts of Whitlock and our resolution of the 
implied covenant claim in that case are instructive here.  The South Big Horn County Water Supply 
Joint Powers Board (JPB) solicited bids for installation of underground 
utilities for a municipal water supply, and Whitlock submitted a bid.  Whitlock, ¶¶ 3-6, 41 P.3d  at 
1263-64.  Although Whitlock was not 
the low bidder, the JPB voted to award the project to Whitlock because it had 
concerns about the purported low bidder.  
Id., ¶¶ 6-7, 41 P.3d  at 
1264.  The project manual provided 
to all bidders stated that the construction contract would not be effective 
unless the agencies providing funding for the project concurred in the award of 
the contract.  Id., ¶ 4, 41 P.3d  at 1264.  The funding agencies did not agree with 
awarding the project to Whitlock instead of to the low bidder.  Id., ¶ 10, 41 P.3d  at 1265.  After the JPB rescinded its award of the 
contract to Whitlock, Whitlock brought suit.  Id., ¶¶ 10-11, 41 P.3d  at 1265.  

 
 
[¶88]   Whitlock claimed that the JPB 
breached the implied covenant of good faith and fair dealing by failing to use 
good faith efforts to obtain the concurrence of the funding agencies.  Id., ¶ 23, 41 P.3d  at 1267.  We agreed with the district court's 
conclusion that there was no breach of the covenant.  We noted that the contract specifically 
provided that it was contingent upon agency concurrence and did not impose an 
affirmative duty on the JPB to obtain such concurrence.  Id., ¶ 25, 41 P.3d  at 1267.  Rejecting Whitlock's claim that an 
implied duty to seek concurrence was included in the contract, this Court 
stated,

 
 
[h]ad 
the parties intended to impose such a duty upon the JPB, they were required to 
expressly state that intention in the contract itself. We are not willing to 
infer that such a duty existed absent clear language in the contract indicating 
that was the parties' intent.

 
 

Id., 
¶ 25, 41 P.3d  at 1267-68.    

 
 
[¶89]   Applying the Whitlock principles here, we refuse to 
imply an affirmative obligation upon the defendants to identify and locate the 
plaintiffs as net profit interest owners when that responsibility was not set 
forth in the Unit NPI Contract.  
Moreover, such an obligation would conflict with the NPI owners' 
responsibility in Section 5 to provide notice of their interest before the 
defendants were obligated to pay.  

 
 
[¶90]   With regard to the plaintiffs' 
claim that the defendants breached the implied covenant of good faith and fair 
dealing after they informed defendants of their interest, we note that the 
plaintiffs stated at the pretrial conference that their claim focused on the 
defendants' pre-litigation conduct.  
Consistently, we refused in Roussalis v. Wyoming Med. Center, Inc., 
4 P.3d 209, 256-57 (Wyo. 2000), to rule that 
litigation conduct could be considered in a bad faith claim.  Consequently, only the short period 
between Mr. Hartman's letter (February 22, 2006) and the filing of this lawsuit 
by the plaintiffs (March 31, 2006) may be considered in addressing the bad faith 
claim.  While the defendants were 
technically in violation of the contract when they failed to pay the net profits 
beginning in March 2006, the plaintiffs do not point to any specific evidence to 
establish that the defendants breached any standard of decency or fairness.14  We agree with the district court's 
substantive assessment that, although the defendants' position that the NPI had 
expired with the Pinedale Unit was ultimately unsuccessful, the plaintiffs did 
not establish that the defendants acted in bad faith when they made that 
argument.  The district court did 
not err by granting judgment as a matter of law on the plaintiffs' bad faith 
claim.    

 
 
D.        Did 
the district court err in granting the non-operator defendants' Rule 52(c) 
motion on the plaintiffs' Wyoming Royalty Payment Act claims?  

 
 
[¶91]   After the plaintiffs rested, 
non-operating defendants Lance and Arrowhead15 moved for a judgment as a 
matter of law on the plaintiffs' claims under the WRPA.  The district court granted the motion, 
concluding that the non-operators under the Unit NPI Contract were not governed 
by the act.   

 
 
[¶92]   As we explained in Section II.B., 
the WRPA is a remedial act which makes obligors liable for interest and 
penalties for failing to pay and report to interest owners in accordance with 
its deadlines.  Section 30-5-303 
states:

 
 
            
(a) Any lessee or operator, purchaser or other party legally responsible 
for payment who violates the provisions of this article is liable to the person 
or persons legally entitled to proceeds from production for the unpaid amount of 
such proceeds, plus interest at the rate of eighteen percent (18%) per annum on 
the unpaid principal balance from the due date specified in W.S. 30-5-301(a).

 
 
            
(b) The district court for the county in which a well producing oil, gas 
or related hydrocarbons is located has jurisdiction over all proceedings brought 
pursuant to this article and the prevailing party in any proceedings brought 
pursuant to this article shall be entitled to recover all court costs and 
reasonable attorney's fees.

 
 
            
(c) Any person who fails to provide royalty information as provided in 
W.S. 30-5-305(b) is liable to the affected royalty, overriding royalty or other 
nonworking interest owner in the amount of one hundred dollars ($100.00) per 
month that complete reporting is not provided to the interest owner.

 
 
[¶93]   The plaintiffs maintain that the 
district court erred in interpreting § 30-5-303(a) as not applying to the 
non-operating defendants.  They 
claim that the non-operating defendants were lessees and working interest owners 
and, therefore, liable under the clear language of the act.  The term "lessee" is defined at § 
30-5-304(a)(i) as:  "the person 
entitled under an oil and gas lease to drill and operate wells, paying the 
lessor a royalty and retaining the remainder, known as the working 
interest."  "Working interest" is 
defined as:  "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."  
Section 30-5-304(a)(viii).  
It is undisputed that Lance and Arrowhead were lessees and working 
interest owners.   However, 
that does not answer the question of whether they fall within the auspices of 
the WRPA.  

 
 
[¶94]   We interpreted § 30-5-303 in Moncrief v. Harvey, 816 P.2d 97, 107-09 (Wyo. 
1991).  In that case, Texaco had an 
oil and gas lease on land owned by the State of Wyoming.  After unitizing the lease with others, 
Texaco entered into a farmout agreement for Moncrief to conduct operations on 
the lease.  Harvey owned an 
overriding royalty on the lease and, when he did not receive the royalty 
payments he believed he was entitled to, he brought suit against Moncrief and 
Texaco.  We ruled that, although 
Texaco was obligated to pay a proportionate share of Harvey's royalty interest, 
it was not a "lessee or operator, purchaser or other party legally responsible 
for payment" within the meaning of the WRPA.  

 
 
[¶95]   In reaching that decision, we 
looked to Moncrief's and Texaco's relative responsibilities under the farmout 
agreement, to conclude:

 
 
            
Texaco was not legally responsible for the actual remittance of its share 
of royalties to Harvey. We will not hold that the non-executive owner of a 
working interest is responsible for remittance out of its share of the proceeds 
for purposes of calculating penalty interest.  Since Texaco was not legally responsible 
for interest under the Royalty Payment Act, it follows, under the rationale in 
BHP Petroleum, 804 P.2d 671, that it was not liable for the seven percent interest ordered by the 
trial court either. We therefore reverse the trial court's order assessing 
interest against Texaco.

 
 

Id. 
at 
109.   The Moncrief decision makes it clear that 
the WRPA applies only to parties contractually obligated to actually remit 
payments to royalty interest owners.  
In that respect, the term "legally responsible for payment" modifies "any 
lessee or operator, purchaser or other party."   This interpretation is confirmed 
by § 30-5-301(a) which we read in pari 
materia with § 30-5-303(a).  
Section 30-5-301(a) states clearly that the payment must be made by the 
party contractually required to do so:  
"Payment shall be made directly to the person . . . entitled thereto by 
the lessee or operator or by any party who assumes such payment obligation under 
any legal arrangement."

 
 
[¶96]   Under the Unit NPI Contract and the 
Supplemental Accounting Agreement, the non-operators were responsible for 
providing funds and information to the operator for the purpose of applying the 
consolidated or basket accounting.   
The operator, however, was responsible for accounting to and actually 
paying the NPI owner.  This 
situation is not materially distinguishable from that presented in Moncrief.  We conclude, therefore, that the 
non-operator working interest owners are not responsible to the plaintiffs under 
the WRPA.  The district court 
properly granted judgment as a matter of law under Rule 52(c) in favor of the 
non-operators on this issue.

 
 

III.           
Bench 
Trial Rulings

 
 

A.   Standard 
of review

 
 
[¶97]   The following rules apply in 
reviewing the determinations of a district court after a bench trial:

 
 
            
After a bench trial, we review the trial court's factual findings under a 
clearly erroneous standard and its legal conclusions de novo.  Hansuld v. Lariat Diesel Corp., 2003 WY 165, ¶ 13, 81 P.3d 215, 218 (Wyo. 2003) 
(citing Rennard v. Vollmar, 977 P.2d 1277, 1279 (Wyo. 
1999)).  We do not substitute 
ourselves for the trial court as a finder of facts; instead, we defer to the 
trial court's findings unless they are unsupported by the record or erroneous as 
a matter of law.  Deroche v. R.L. Manning Co., 737 P.2d 332, 336 (Wyo. 1987).  Although the factual findings of a trial 
court are not entitled to the limited review afforded a jury verdict, the 
findings are presumptively correct.  
Piroschak v. Whelan, 2005 WY 26, ¶ 7, 106 P.3d 887, 890 (Wyo. 
2005).

 
 
            
This Court may examine all of the properly admissible evidence in the 
record, but we do not reweigh the evidence.  Forshee, et ux. v. Delaney, et ux., 2005 
WY 103, ¶ 6, 118 P.3d 445, 448 
(Wyo. 2005).  Due regard is given to 
the opportunity of the trial judge to assess the credibility of the 
witnesses.  We accept the prevailing 
party's evidence as true and give to that evidence every favorable inference 
which may fairly and reasonably be drawn from it.  Harber v. Jensen, 2004 WY 104, ¶ 7, 97 P.3d 57, 60 (Wyo. 2004) (quoting 
Life Care Centers of America, Inc. v. 
Dexter, 2003 WY 38, ¶ 7, 65 P.3d 385, 389 (Wyo. 2003)).  Findings may not be set aside because we 
would have reached a different result.  
Harber, ¶ 7, 97 P.3d  at 60 
(citing Double Eagle Petroleum & 
Mining Corp. v. Questar Exploration & Production Co., 2003 WY 139, ¶ 6, 78 P.3d 679, 681 (Wyo. 2003)).  A finding will only be set aside if, 
although there is evidence to support it, this Court on the entire evidence is 
left with the definite and firm conviction that a mistake has been 
committed.  Mullinnix LLC v. HKB Royalty Trust, 2006 WY 14, ¶ 12, 126 P.3d 909, 916 (Wyo. 2006)

. 
. . . 

 
 
We 
review questions of law de novo.  Y-O Investments, Inc. v. Emken, 2006 WY 112, ¶ 8, 142 P.3d 1127, 1130 (Wyo. 2006).

 
 

Snelling 
v. Roman, 
2007 WY 49, ¶¶ 7-9, 154 P.3d 341, 345 (Wyo. 2007).

 
 

B.           
Did 
the district court correctly determine that the non-operating defendants 
breached the Unit NPI Contract by failing to pay the NPI? 

 
 
[¶98]   After the bench trial, the district 
court found that the non-operating defendants, Lance, SWEPI, Williams and 
Arrowhead, had breached their obligations under the Unit NPI Contract.

 
 
            
21.       
[The non-operators] have the obligation under Section 1 of the Net 
Profits Contract to pay 5% of the net profits resulting from operations under 
the leases.  They have obligations 
under the Net Profits Contract (Section 2) and the Supplemental Accounting 
Agreement (Section 2) to provide revenue and expense information as well as 
contribute 5% of their gross revenue in cash so that the operators can calculate 
the NPI and account to and pay the NPI owners.

 
 
. 
. . .

 
 
            
23.       
Defendants Lance, SWEPI, Williams and Arrowhead failed to contribute net 
profits, failed to provide an accounting to the operator defendants in order to 
allow them to account for the NPI and pay net profits to the plaintiffs, and 
failed to pay the operators for their 5% share of gross revenue from operations 
under the Subject Leases.   

 
 
The 
district court then concluded that all defendants were in breach of contract for 
failing to account for and pay the NPI.    

 
 
[¶99]   The non-operating defendants claim 
that the obligation to pay under the Unit NPI Contract belonged to the operators 
only and, consequently, they could not be found in breach of contract for 
failure to account for or pay the NPI to the plaintiffs.  The pertinent part of Section 1 of the 
Unit NPI Contract provides:

 
 
            
Subject to the conditions hereinafter set forth, First Parties agree to 
pay to Novi a sum or sums representing 5% of the net profits (as hereinafter 
defined), herein referred to as "said net profits interest," resulting from 
operations for oil and gas by First Parties, or any of them, under those certain 
leases . . . .

 
 
Section 
3 provides that "the responsibility for handling the accounting for net profits 
and making payments hereunder to Novi . . . shall be the responsibility of [the 
operator(s)]." The obligations and rights under the agreement carried over to 
First Parties' and Novi's successors.   

 
 
[¶100] 
The non-operating defendants argue that the "[s]ubject to the conditions 
hereinafter set forth" language in Section 1 refers to the Section 3 payment 
provisions of the Unit NPI Contract and, therefore, places the entire 
responsibility for paying the NPI on the operators.  They claim that this provision relieves 
them from responsibility to the plaintiffs.  The district court rejected the 
non-operators' position stating that, while the clerical responsibilities for 
handling the accounting and actually remitting the payments were delegated to 
the operators under the contract, the ultimate obligation to pay had not been 
delegated.  The district court cited 
to Corbin on Contracts § 866 (1951) [§ 49.7 (2007)] in support of its 
decision:  "The performance required 
by a duty can be delegated; but, by such delegation, the duty itself cannot be 
escaped."  

 
 
[¶101]  There is no dispute that all of the 
defendants, operators and non-operators alike, were successors to the First 
Parties.  The clear language of 
Section 1 of the Unit NPI Contract provides that First Parties had the 
obligation to pay the net profits interest.  If we were to adopt the non-operators' 
interpretation of the contract, the reference to First Parties, as opposed to 
operator, in Section 1 would be meaningless.  In fact, under the non-operating 
defendants' interpretation, the First Parties who were not operators would have 
no material obligations under the Unit NPI Contract.  Such an interpretation would violate one 
of the basic tenets of contract interpretation which requires that we give 
effect to all of the language in a contract and clearly would not implement 
Novi's and the First Parties' intent.  
Thus, we agree with the district court's interpretation of the 
contractalthough the First Parties delegated the administrative functions to 
the operators, all of the defendants, including operators and non-operators, 
retained the ultimate obligation to pay.  

 
 
[¶102]  It was undisputed that none of the 
defendants paid net profits under the Unit NPI Contract, and the district 
court's finding to that effect was correct.  As to the discrete question of whether 
the non-operators breached their contractual responsibility to account for and 
pay the net profits, there is simply no question that the district court 
properly held that they did.  The 
related questions of whether the district court correctly ruled that all 
defendants (both operators and non-operators) were jointly and severally liable 
for the entire judgment will be considered below in Section III.G.  

 
 

C.           
Did 
the district court err by ruling that plaintiffs were entitled to be awarded 
WRPA interest and penalties against the operating defendants Shell and Ultra 
when the Unit NPI Contract provided that they could withhold payment of net 
profits, without interest, during the pendency of any dispute regarding 
ownership of the NPI?

 
 
[¶103] As we noted in Section II.B., the WRPA applies 
to net profits interests.  The 
district court ruled that, once the plaintiffs had given notice of their 
ownership of the NPI in February 2006, the operator defendants had an obligation 
to pay them under § 30-5-301(a), or to at least deposit the proceeds into escrow 
as allowed by the good faith provision of § 30-5-302.  Because the operator defendants failed 
to do so, the district court ruled that they were obligated to pay interest and 
penalties under § 30-5-303.    

 
 
[¶104] On appeal, Shell and Ultra, as operator 
defendants, argue that they were exempt from the interest and penalties 
provisions because § 30-5-301(a) allows parties to contract for different 
"arrangements" for payment.  They 
claim that First Parties and Novi provided for just such different arrangements 
in Section 5 of the Unit NPI Contract, which stated:  "In the event of any dispute at any time 
concerning the ownership of any net profits interest payable hereunder, 
[o]perator may withhold payment of such net profits interest or any part thereof 
of the amount in dispute without interest until such dispute is settled."  

 
 
[¶105] The plain language of the Unit NPI Contract 
allowed the operator to withhold payment if the ownership of the net profit 
interest was in dispute.  As we 
explained in Section II.B. of this opinion, once the plaintiffs gave notice of 
their ownership in the February 22, 2006, letter, there was no dispute over who 
owned the net profits interest.  
After that notice, the defendants continued to maintain that the NPI 
interest no longer existed because it was conditioned upon the continued 
existence of the Pinedale Unit.  The 
contractual provision which allowed the operator to withhold payment in the 
event of an ownership dispute does not apply to the defendants' attempt to 
renounce the contract.  Novi 
certainly did not agree to allow the First Parties to deny the contract as a 
whole and still claim protection under its "no interest" provision.  The contract did not, therefore, provide 
different arrangements for payment; once the operators were provided with 
sufficient evidence of plaintiffs' title, they were obligated to pay and the 
WRPA applied.  

 
 
[¶106] The defendants argue that Followwill v. Merit Energy Co., 371 F. Supp. 2d 1305 (D. Wyo. 2005) applies to their situation.  There, the United States district court 
dismissed the plaintiffs' WRPA claim stating that the parties' contract, which 
was executed prior to the adoption of the WRPA, controlled the royalty 
calculation and the WRPA did not supersede it.  Followwill simply does not apply here 
because both the Unit NPI Contract and the WRPA required payment after the 
defendants were properly notified of plaintiffs' interest.16       

 
 
[¶107] The WRPA required the defendants to pay the 
plaintiffs or, at least, to deposit the NPI proceeds into escrow to avoid the 
statutory interest.  The obligation 
took effect as soon as the operator defendants were made aware of the 
plaintiffs' interest.  Cities Services, 838 P.2d  at 157.  By failing to make the required 
payments, the operator defendants violated the WRPA.  The district court properly interpreted 
the Unit NPI Contract and the relevant statutes when it determined the 
defendants were liable for statutory interest and penalties.    

 
 
D.        Was 
State Lease 79-0645 a "replacement lease" under the Unit NPI 
Contract?

 
 
[¶108] Wyoming State Leases 0-11505 and 0-11529 were 
identified in Exhibit A to the Unit NPI Contract and originally included in the 
Pinedale Unit.  In 1977, the unit 
contracted and the two state leases were eliminated.  The leases terminated because they were 
already past their primary term and there was no production attributable to the 
leases.17  Two years later, in 1979, the same lands 
were leased to Robert E. Ribbe in State Lease 79-0645, and he assigned the lease 
to Questar's predecessor in 1980.  
Questar later assigned its interest in State Lease 79-0645 to defendants 
Lance and Ultra.  The plaintiffs 
argued that Lease 79-0645 was subject to the NPI because it was a "replacement 
lease" under the terms of the Unit NPI Contract.

 
 
[¶109] The relevant provision of the Unit NPI Contract 
states:

 
 
 7.  
SURRENDER 

 
 
            
First Parties reserve and shall have the right to release and surrender 
said leases except those acquired from Novi, either in whole or in part, at any 
time without giving any notice thereof to or obtaining any consent or approval 
thereof from Novi or Novi's successors in interest, and such release or 
surrender shall terminate the net profits interest herein provided for as to the 
leasehold interest which is so released and surrendered.

            

                        
. . . .

 
 
In 
the event any lease is surrendered or released pursuant to the provisions of 
this section and thereafter First Parties, or any of them, obtain a lease 
covering lands the leasehold interest in which has been so surrendered, the 
interest so acquired or obtained by First Parties, or any of them, shall be 
subject to the provisions hereof, if such new lease is obtained within five (5) 
years from the date of any such surrender or release; otherwise, such new lease 
shall be held by First Parties, or any one of them acquiring such interest, free 
and clear of the provisions of this agreement and without any obligations 
whatsoever to Novi.

 
 
[¶110]  At 
the conclusion of the bench trial, the district court ruled that Lease 79-0645 
fell under the provisions of the last clause of Section 7 and, therefore, was 
subject to the NPI as a "replacement lease."  The district court made the following 
relevant findings of fact:

 
 
            
11.       
Defendants argue that State leases 0-11505 and 0-11529 "expired" so that 
the wash-out provision of Section 7 of the Net Profits Contact does not 
apply.  As of 1977, all leases in 
the Pinedale Unit were past their primary term, but they remained in force and 
effect by reason of unitization in the Pinedale Unit.  The Pinedale Unit Agreement specified a 
lease elimination provision in Paragraph 2(e) operative upon contraction or 
termination of the unit by the operator.  
  

 
 
            
12.       
On August 11, 1977, the then operator of the Pinedale Unit, El Paso 
Natural Gas Company ("El Paso"), wrote interest owners Mountain Fuel Supply and 
Hondo Oil & Gas Company announcing that it planned "activation of the 
automatic elimination provision of the Pinedale Unit . . . ."  On October 12, 1977, El Paso informed 
the United States Geological Survey as follows:

 
 
            
"El Paso Natural Gas hereby files a plan of development for the calendar 
year 1977 calling for no activity.  
In accordance with the foregoing, it is our view that this action will 
activate the automatic elimination provision of the Pinedale Unit Agreement as 
set forth in the amendment to said unit dated February 15, 1974."

 
 
            
13.       
The action of El Paso was in essence a surrender of all of the leases it 
held in the Pinedale Unit and resulted in the termination of the State leases 
and reversion of the mineral estate to the lessor, the State of Wyoming.

 
 
            
14.       
Lease 79-0645 was acquired by a First Party within five years of the 
surrender of the predecessor Exhibit A state leases and is subject to the Net 
Profits Contract.

 
 
(Citations 
omitted).  The district court's 
conclusions of laws included:

 
 
            
State Lease 79-0645

 
 
            
82.       
The final clause of Section 7 of the Net Profits Contract provides 
protection for Novi and its successors from a "wash out."  "A washout' is the elimination of an 
overriding royalty or other share of a working interest by the surrender of a 
lease by a sub lessee or assignee and subsequent reacquisition of a lease on the 
same land free of such interest."  A 
"renewal clause" is included in an instrument to avoid a washout.  

 
 
            
83.       
The term "surrender" involves a voluntary transfer of all or part of the 
defeasible fee simple estate held by the lessee back to the lessor.  
The surrender or release of a leasehold interest contemplates an 
affirmative act by the lessee. 

 
 
            
84.       
El Paso surrendered Exhibit A state leases 0-11505 and 0-11529.  State lease 79-0645 covers the lands in 
the leaseholds so surrendered, was acquired by a First Party within five years 
of surrender, and is burdened by the NPI under the terms of the Net Profits 
Contract.

 
 
(Citations 
omitted).    

 
 
[¶111]  As 
we discussed in Section I.B. of this decision, Section 7 of the Unit NPI 
Contract constitutes what is commonly known as an anti-washout clause.  The purpose of such a clause is to 
protect the owner of an overriding royalty or net profit interest from having 
his interest removed by the lessee giving up the lease and then reacquiring the 
same lands without the burden.  
Anti-washout clauses extend the burden to a new lease obtained on the 
same property by the same lessee within a certain period of time.  See, e.g., Sawyer v. Guthrie, 215 F. Supp. 2d 1254, 
1264 (D. Wyo. 2002); Avatar Exploration, 
Inc. v. Chevron, U.S.A., Inc., 933 F.2d 314, 319 (5th Cir. 
1991).   

 
 
[¶112] Section 7 applies when the First Parties 
"release" or "surrender" the leases.  
The plain meaning of the term "surrender" is "to yield (something) to the 
possession or power of another."  Webster's Third New Int'l 
Dictionary  2301 (2002).  Similarly, the relevant definition of 
"release" is "to give up, relinquish, or surrender (a right, claim, etc.)."  Id. at 1917.  Both of these verbs require some sort of 
voluntary, affirmative act by the one doing the surrendering or releasing.18   

 
 
[¶113] The parties disagree over whether First Parties 
(El Paso) took an affirmative action to surrender/release the original state 
leases or the leases terminated automatically under the terms of the Pinedale 
Unit Agreement.  The defendants 
argue that, in order for Section 7 to apply, El Paso had to voluntarily assign 
or transfer the leases back to the lessor (the State of Wyoming) and that did 
not happen here.  The plaintiffs 
maintain the act of surrendering or releasing does not require assignment or 
transfer and the evidence established that El Paso took affirmative action to 
surrender/release the leases.   

 
 
[¶114] The defendants direct us to a Fifth Circuit 
case they claim supports their position, Fuller v. Phillips Petroleum Co., 872 F.2d 655 (5th Cir. 1989).    Fuller and Phillips both 
owned leases in a "Unit Area."  Id. at 656.  They entered into an operating agreement 
which included a provision requiring "the consent of all parties before the 
surrender, in whole or in part, of any lease affecting the Unit Area or, in the 
absence of such consent, the assignment of such leases to the non consenting 
parties."  Id. at 659.   Some of the leases terminated due 
to cessation of production and Fuller brought an action claiming breach of the 
provision requiring Phillips to obtain his consent before surrendering the 
leases.   Id.  
The Fifth Circuit ruled that Phillips had not breached the contract 
because the leases expired on their own terms and the surrender clause was 
inapplicable.  The court 
explained:

 
 
[Fuller's 
argument] is belied by the legal difference between the terms "surrender" and 
"termination" of a lease. In the oil and gas industry, the term "surrender" 
refers to the contractual right of a lessee to voluntarily relinquish to the 
lessor all or part of the leased premises, thereby allowing the lessee to retain 
the most profitable portion of a lease while at the same time releasing the 
least profitable portion of the lease. William & Meyers, 8 Oil and Gas 
Law § 966 (1985). Moreover, while a lease may be terminated by the act of 
one party by surrendering its rights under the lease, such a surrender may only 
occur while the lease is in effect. In contrast, "termination" of a lease as 
applied to the facts of the instant case refers to the expiration of a lease by 
its own terms for the failure of the operator (Phillips) to maintain operations 
on the leased premises.

 
 

Id.  at 
659-60.  

 
 
[¶115] 
 Fuller did not involve a "washout" 
situation; there is no indication that Phillips reacquired the leases to 
Fuller's detriment.  Thus, we find 
the case of limited value to the issue presented here.  We agree, however, with the concept 
recited in the decision that "surrender" requires voluntary relinquishment of an 
interest while the lease is still in effect.  

 
 
[¶116] The ten year primary term of the original state 
leases ended in 1961.  The leases 
remained in force after that because they were included in the Pinedale 
Unit.  The Unit Agreement had 
clauses for automatic contraction; nevertheless, the First Parties had 
negotiated with federal authorities for extension of the automatic contraction 
provision on at least two occasions.  
Amendments to the Unit Agreement reflected the extensions.    Finally, on August 10, 1977, 
(twenty-three years after formation of the unit and sixteen years after the 
primary term of the leases expired), First Party and operator El Paso notified 
the other First Parties, with copies to state and federal authorities, that it 
was going to allow unit contraction.  
The letter stated in relevant part:

 
 
El 
Paso Natural Gas Company, as Operator of [the Pinedale Unit], wishes to advise 
of the activation of the automatic elimination provision of the Pinedale Unit as 
set forth in the Amendment to said Unit dated February 15, 1974.  It is anticipated that the elimination 
be effective September 12, 1977, the date on which the filing of a Plan of 
Development for the ensuing year is required.  Although it is our belie[f] that such 
action is automatic, please furnish us [with] any comments or suggestions you 
may have within fifteen (15) days from the date of this letter. 

 
 
It 
is with extreme reluctance and regret that we ac[cede] to this result.  . . . It appears most unlikely that 
elimination of certain lands from the Unit, the ultimate restoration of such 
lands to the public domain and the subsequent leasing thereof to others will 
result in said lands being developed with the same imagination and tenacity 
which have been heretofore demonstrated.  
Economic realities have brought us to the point where we feel additional 
immediate operations cannot be justified and therefore we feel we have no 
practical alternative but to ac[cede] to the above automatic elimination.  

 
 
El 
Paso then followed up with a letter to the USGS on October 12, 1977.  The letter reiterated its regret in 
"acceding" to the automatic elimination and also stated, in relevant 
part:

 
 
El 
Paso Natural Gas Company hereby files a plan of development for the calendar 
year 1977 calling for no activity.  
In accordance with the foregoing, it is our view that this action will 
activate the automatic elimination provision of the Pinedale Unit Agreement . . 
. .

 
 
[¶117] There is simply no question that El Paso 
affirmatively yielded possession of the leases to the lessor (State of 
Wyoming).  Until El Paso filed its 
development plan of "no activity," the original state leases remained in effect 
as part of the Pinedale Unit.  The 
letters make it very clear that El Paso (as operator) had the power to determine 
how to proceed with the unit and leases included within the unit.  In fact, the First Party operators had, 
for twenty-three years since formation of the unit, filed development plans and 
negotiated amendments to the unit agreement to prevent contraction of the 
unit.  By filing a plan of no 
activity, the operator acceded to the contraction of the unit.  This action was a surrender that 
triggered the anti-washout provision.  
When a successor of the First Parties re-acquired the same lands in State 
Lease No. 79-0645 within the five year period set out in Section 7, the NPI 
attached to the new lease.  The 
anti-wash provision was designed to protect the plaintiffs (as successors to 
Novi) from the exact situation that happened heresurrender of the lease 
followed by a subsequent reacquisition of the same property by the same 
lessee.  The district court's 
interpretation of Section 7 of the Unit NPI Contract was correct and its 
findings of fact, particularly its finding that El Paso surrendered the leases, 
were not clearly erroneous.   

 
 
E.        Did 
the district court err by ruling that plaintiffs' claims were not time barred 
under the statute of limitations or the equitable doctrine of 
laches?

 
 
[¶118] The defendants asserted that the plaintiffs' 
claims were time barred by the relevant statutes of limitation and the equitable 
doctrine of laches.  At the 
conclusion of the bench trial, the district court rejected the defendants' 
affirmative defenses.  They argue 
that the district court's rulings were in error.

 
 
[¶119] The defendants are somewhat imprecise about 
which statute of limitation governs the plaintiffs' claims, citing in turn to 
Wyo. Stat. Ann. §§ 1-3-103 (LexisNexis 2009) (ten year limitation period for 
recovery of real property); Wyo. Stat. Ann. § 1-3-105 (LexisNexis 2009) (ten 
year limitation period for contract actions); and Wyo. Stat. Ann. § 1-3-109 
(LexisNexis 2009) (ten year limitation for other actions).  The defendants assert that the 
plaintiffs' claim accrued in 1985 when some of the plaintiffs brought suit 
against Sun seeking an accounting on a package of properties they had previously 
purchased from Sun, which they believed included the NPI.  At first, Sun maintained that it did not 
have any information about the Pinedale Unit because it had never owned any 
interest in the unit and, consequently, had not conveyed the NPI to the 
plaintiffs.  The defendants argue 
that Sun's position was based, in part, on its belief that the NPI had 
terminated with the Pinedale Unit.  
The plaintiffs provided Sun with information about its properties in the 
Pinedale Unit and the suit with Sun ended in settlement which included a 
specific transfer of the NPI.       

 
 
[¶120] The district court rejected the factual basis 
for the defendants' argument that the limitations period began to run in 1985 as 
a result of the plaintiffs' exchanges with Sun:

 
 
70.   
Defendants argue that exchanges between plaintiffs and [Sun] in 1985 
should have caused plaintiffs to institute a quiet title suit concerning 
ownership of the NPI.  This 
contention is not supported in the record.  
Sun confirmed its receipt of ownership of the NPI by assignment from 
Texas Pacific Oil Company by an internal memo dated November 8, 1985, authored 
by Oliver Price.  Exhibit B95.  Sun agreed to convey whatever interest 
it had in the NPI by letter agreement with plaintiffs dated December 30, 
1985.  Exhibit B99.  Sun conveyed its interest by a 
conveyance to Hartman et al. dated January 2, 1986.  Exhibit 45/CO5.  No dispute existed between Sun and 
plaintiffs regarding the scope and ownership of the NPI during 1985-86.  Any earlier confusion regarding 
ownership of the NPI was resolved to plaintiffs' satisfaction when Sun conveyed 
to plaintiffs all interest Sun owned in the NPI.   

 
 
[¶121] The district court's factual findings are not 
clearly erroneous.  The record 
confirms the district court's finding that the controversy between plaintiffs 
and Sun, including the issue of whether Sun owned the NPI, was resolved to the 
plaintiffs' satisfaction by the exchange of information between the plaintiffs 
and Sun and the settlement between the parties.  We, therefore, reject defendants' 
challenge to the district court's factual findings.

 
 
[¶122] At its essence, this dispute involves a claim 
for breach of the Unit NPI Contract.  
The statute of limitations on contract claims is ten years.  Section 1-3-105(a)(i).  In an action founded upon the breach of 
a written contract, the limitation period begins running when the breach 
occurs.  It is at this time that the 
cause of action accrues.  Swinney v. Jones, 2008 WY 150, ¶ 8, 199 P.3d 512, 515 
(Wyo. 2008); Richardson Associates v. Lincoln-Devore, Inc., 806 P.2d 790, 802 (Wyo. 1991).  The breach was the defendants' failure, 
as successors to First Parties, to pay net profits to plaintiffs, as Novi's 
successors, in accordance with the Unit NPI Contract.19  Net profits became due and payable in 
May 2005.  The plaintiffs filed 
their suit in March 2006, less than one year after their claim accrued.  The district court properly rejected the 
defendants' statute of limitations claim.  

 
 
[¶123] The defendants also argue that the plaintiffs' 
claims are barred under the equitable doctrine of laches.  "Laches is defined as such delay in 
enforcing one's rights that it works to the disadvantage of another."  Dorsett v. Moore, 2003 WY 7, ¶ 9, 61 P.3d 1221, 1224 
(Wyo. 2003).  The defense of laches 
is based in equity and whether it applies in a given case depends upon the 
circumstances.  Hammond v. Hammond, 14 P.3d 199, 201 (Wyo. 2000); Moncrief v. Sohio Petroleum Co., 775 P.2d 1021, 1024-25 (Wyo. 
1989).  There are two elements which 
must be shown to establish the defense of lachesinexcusable delay in the 
assertion of a right and injury, prejudice or disadvantage to the 
defendants.  Moncrief, 775 P.2d  at 1025.  

 
 
[¶124] The district court ruled that the doctrine of 
laches does not apply to an action at law for breach of contract and cited Hammond for that statement.  In Hammond we ruled that laches did not 
apply to "child support collection actions because suits for monetary judgments 
for child support arrearages are legal rather than equitable."  Hammond, 14 P.3d  at 202.  On the other hand, as the defendants 
correctly point out, we have stated that claims under oil and gas contracts are 
subject to the defense of laches.  
In Moncrief, we stated that 
"innumerable cases have established that the doctrine of laches is particularly 
applicable to oil and gas and mining claims due to the nature of such property 
interests."  Moncrief, 775 P.2d  at 1025.  That decision held that the plaintiffs' 
claims were barred under the doctrine of laches even though there was also a 
legal claim under the statute of limitations.  Id. at 1024.  But see, Thomas, J., concurring opinion, 
Id. at 1028 (indicating that the case 
should have been decided on the basis of the statute of limitations).  We do not need to resolve the dilemma of 
whether laches may be asserted when the claim is legal in nature because the 
district court properly concluded that the doctrine clearly does not apply to 
the circumstances presented here.

 
 
[¶125] The defendants assert that the plaintiffs' 
delay in asserting their net profits interest prejudiced them because the 
plaintiffs did not record one conveyance document which transferred part of the 
NPI interest to them for twenty years or otherwise advise the defendants of 
their interest and they did not exercise diligence by demanding an 
accounting.  They claim that the 
plaintiffs' lack of diligence led to the loss of accounting information, 
etc.  The district court made the 
following finding of fact in response to the defendants' argument:

 
 
            
72.       
Defendants did not change their position regarding the NPI by reason of 
any action or non-action by plaintiffs.  
Defendants have not demonstrated any injury or prejudice they have 
suffered as a result of any alleged delay by plaintiffs.  With full knowledge of the NPI, all 
defendants hold and continue to freely develop and financially benefit from 
their oil and gas operations on the Subject Leases including two valuable, 
original Novi leases.

 
 
[¶126] The district court's finding was not clearly 
erroneous.  As we stated in our 
discussion of the statute of limitations, the plaintiffs' claim did not accrue 
until net profits were first realized in May 2005.  The plaintiffs gave notice of their 
interest less than a year later in Mr. Hartman's February 2006 letter and they 
filed suit the next month.  

 
 
[¶127] With regard to the defendants' argument that 
the plaintiffs' lack of diligence led to their accounting troubles, the trial 
evidence included discussion of numerous title opinions over many years which 
referred to the NPI.  The Assignment 
Agreement, which included a non-executed copy of the Unit NPI Contract, and the 
Supplemental Accounting Agreement had both been recorded since 1955 and clearly 
set out the First Parties' accounting responsibilities.  Beginning in 1999, Questar/Wexpro wrote 
the operating defendants on an annual basis reminding them of their 
responsibilities to account for the NPI.  
Steve Van Hook, who had worked for McMurray during the time it owned 
interests in the Pinedale Field, testified that he had looked into the NPI when 
the field first started to be productive.  
He talked to representatives from Ultra and Questar, but nothing was 
resolved at the time.  A statement 
made by Mr. Van Hook in a 2002 memo provides context for the defendants' 
treatment of the NPI.  "[W]e were 
all too busy drilling wells and fighting with each other to address [the NPI]. . 
. .  All the operators kn[e]w [the 
NPI] exist[ed], they just d[id]n't want to face it at th[e] time."  Landman Tom Noonan also confirmed that 
the defendants were aware of the NPI when he testified that he had investigated 
the NPI for Ultra beginning in 1997.    

 
 
[¶128] Any prejudice suffered by the defendants as a 
result of their failure to keep accurate records was of their own making.  They were clearly on notice that the NPI 
existed and knew they had accounting responsibilities associated with the 
interest.  The district court's 
findings of fact on the laches issue are not clearly erroneous and it correctly 
ruled that the defendants had not established the defense.   

 
 
F.         
Did the district court err by refusing to exclude certain expenses from 
the net profits calculation?

 
 
[¶129] The district court made the following findings 
regarding calculation of the NPI due to plaintiffs:

 
 
            
27.       
The Net Profits Contract sets forth the terms to be applied and honored 
in order to perform proper computation of any payable net profits.  The accounting requirements are set 
forth in the body of the Net Profits Contract, in Exhibit A listing the 
permitted royalty and overriding royalty burdens on the leases, and in Exhibit 
C-1, which is an Accounting Procedure.

 
 
            
28.       
The Net Profits Contract Accounting Procedure may not be amended without 
the consent or approval of Novi or its successors in interest, including 
plaintiffs or their successors in interest.  The Net Profits Accounting Procedure has 
never been amended.

 
 
            
29.       
The Net Profits Contract and the Net Profits Accounting Procedure 
establish principles to be followed in performing a proper accounting of the NPI 
as follows:

 
 

(a)  
Plaintiffs' 
net profits equals 4.98% of cumulative gross revenue less cumulative expenses on 
a consolidated basis associated with the operation of NPI leases and wells on 
those leases;

 
 

(b)  
The 
NPI is to be calculated each month and the incremental net profits for that 
month, if positive, is to be paid as soon as practicable after the end of any 
month in which net profits have been realized;

 
 

(c)  
Gross 
revenue is based on proceeds from wellhead gas and oil sales and on fair market 
value for other sales and for unsold production;

 
 

(d)  
Deductible 
expenses are all those that are reasonable and customary in connection with the 
operation and development of oil and gas properties.  These expenses are properly chargeable 
against the NPI leases and are limited by amounts specified in the Accounting 
Procedure unless and until that procedure is amended as provided herein;

 
 

(e)  
Expenses 
that are not reasonable and customary and not properly chargeable in connection 
with the operation and development of NPI lease and therefore, not deductible, 
include, among others, federal income tax, interest on capital and other 
expenses, depreciation, acquisition costs, accrual accounts, and future asset 
retirement accounts;

 
 

(f)   The 
Accounting Procedure limits the amount of deductible labor expense (including 
employee benefits), Pinedale district office expense, well overhead rates, and 
legal expenses; and

 
 
(g) Deductible expenditures that benefit both NPI 
and non-NPI wells are allocated based on the ratio of the operators' end-of-year 
NPI well count to total well count.  

 
 
1.         
Gas used on lease

 
 
[¶130]  In determining the amount of net profits 
due to the plaintiffs, the district court ruled that the value of gas produced 
but used in lease operations rather than sold was properly included on the 
revenue side of the calculation under the terms of the Unit NPI Contract.  The defendants argue that the district 
court improperly interpreted the Unit NPI Contract in arriving at that 
decision.  Section 2 of the contract 
pertains to computation of the net profits.  That provision states in relevant 
part:

 
 
            
In computing gross revenue, there shall be taken into account the 
proceeds of production sold for delivery at the wellhead.  As to production not so sold, the fair 
market value of such production at the wellhead shall be taken into account.

 
 
[¶131] The plaintiffs argue that the "production not 
so sold" language of Section 2 applies to all gas produced and not sold at the 
wellhead, including gas used on the lease.  
The defendants maintain that the provision only speaks to gas not sold at 
the wellhead but sold downstream and does not require considering the value of 
gas used on the lease.  We do not 
take contract language out of context.  
Instead, "[w]e interpret contracts as a whole, reading each provision in light of all the 
others to find the plain and ordinary meaning of the words."  State ex rel. Arnold v. Ommen, 2009 WY 24, ¶ 40, 201 P.3d 1127, 1138 (Wyo. 
2009).  See also, Squillace v. Wyoming State 
Employees' and Officials' Group Ins. Bd. of Admin., 933 P.2d 488, 491 (Wyo. 1997).  Consistent with our rules of contract 
interpretation, we must interpret the disputed phrase in the context of the 
entire provision pertaining to calculation of the NPI.  

 
 
[¶132] The computation provision of the Unit NPI 
Contract states that deductible expenses include those associated with drilling, 
completion and producing wells.  
Without question, if the producers purchased gas to use in lease 
operations, that expense would be deductible.  In order to read the provisions of the 
Unit NPI Contract consistently, the revenue from gas used on the lease must 
either be removed from the revenue calculation or deducted because it would be 
an allowable expense in computing net profits.  We conclude, therefore, the disputed 
language, "production not so sold" speaks only to production that is not sold in 
accordance with the previous provision, i.e., at the wellhead.  The language simply provides a means of 
calculating the value of gas sold downstream from the wellhead.  It does not pertain to gas used on the 
lease.  The district court erred by 
including that revenue in the net profits calculation and we remand for 
proceedings consistent with this decision.20 

 
 
2.         
Fixed expenses/overhead

 
 
[¶133] The defendants claim that the district court 
erred by ruling that the allowable overhead expenses set out in a 1954 
accounting procedure applied to their operations in the twenty-first century. 
 As the district court recognized, 
the Unit NPI Contract expressly incorporated the accounting procedures contained 
in the standard 1953 PASO form, which was attached to the Unit NPI Contract as 
Exhibit C-1.  The accounting 
procedures contained certain allowable expense amounts and included limitations 
on deductions for employee benefit costs, administrative overhead for drilling 
and producing wells and expenses associated with district and camp offices.  

 
 
[¶134] The accounting procedure stated that employee 
benefit labor expenses were deductible, but that "the total of such charges 
shall not exceed [ten percent crossed out and 10 ½ percent added in] of 
Operator's labor costs . . . ."  The 
accounting procedure also stated that administrative overhead for wells was a 
deductible expense, up to $375 per month for drilling wells and $75 per month 
for producing wells, although the "above specific overhead rates may be amended 
from time to time by agreement between operator and non-operator if, in practice 
they are found to be insufficient or excessive."  The amounts were not standard, but were 
typed in by the First Parties and Novi.  
Section II.11 of the accounting procedures limited deductible expenses 
for the operator's district and camp offices.   

 
 
[¶135] The plaintiffs' expert accounting witness used 
the limitations included in the accounting procedures to exclude some of 
defendants' expenses, while defendants' expert accountant included all of their 
expenses as deductions in the NPI calculation.  The defendants' expert stated that the 
overhead expenses were not restricted by the amounts in the accounting procedure 
because the Unit NPI Contract specifically allowed the deduction of "all 
expenses" and charges that are "reasonable and customary."   

 
 
[¶136] We conclude the district court properly 
interpreted the overhead expense provisions of the First Parties' and Novi's 
agreement.  While the Unit NPI 
Contract allows for the deduction of any reasonable and customary expenses, that 
provision does not govern the overhead amount.  The specific provisions in the 
accounting procedure for overhead would not have been necessary if the parties 
intended that the "reasonable and customary" provision would control.  The fact that they crossed out 10 
percent and inserted 10 ½ percent for the employee benefits deduction, typed in 
specific overhead amounts for drilling and producing wells, and specifically 
designated certain district and camp office expenses as deductible, indicates 
that they clearly gave specific thought to those expenses.

 
 
[¶137] We do not dispute the defendants' contention 
that the amounts may no longer be reasonable.  However, it is not our role to construe 
a contract to reach a different result than that clearly stated in the contract 
language.  In other words, no matter 
how unwise the parties' agreement, our task is to interpret their intent as 
expressed in the contract's plain language.  Collins v. Finnell, 2001 WY 74, ¶ 21, 29 P.3d 93, 101 
(Wyo. 2001).  The parties recognized 
that the amounts may not continue to be feasible over time and specifically 
allowed for amendment of the agreement to reflect a change of conditions in 
Section II.12.  The district court 
ruled that no such amendment had been made and the defendants do not direct us 
to any evidence showing an express amendment to the contract provisions which 
define allowable expenses.21  If the proper parties agree to such an 
amendment in the future, different overhead amounts may be applied to future NPI 
calculations.   

 
 
G.        Did 
the district court err by holding all defendants jointly and severally liable 
for the entire judgment?

 
 
[¶138] The district court ruled that the promise to 
pay the NPI was a joint and several obligation of all of the defendants, as 
successors to First Parties.  It 
ruled, therefore, that "each defendant is liable for the full amount of the 
damages resulting from [the] breach."  
The non-operating defendants argue that the district court erred by 
making them jointly and severally liable for the entire judgment.    

 
 
[¶139] As we stated above, each defendant, as a 
successor to "First Parties," had a duty to pay the plaintiffs' net profit 
interest.  That ruling does not, 
however, determine whether each defendant should be held jointly and severally 
liable for the full judgment amount.  
The district court cited to Gilstrap v. June Eisele Warren Trust, 2005 WY 21, 106 P.3d 858, 865 (Wyo. 2005) and 
Restatement (Second) Contracts, § 289(2) (1981) in support of its decision that 
all defendants were jointly and severally liable for the entire judgment.  In Gilstrap, ¶ 21, 106 P.3d  at 865, we 
considered a warranty in a deed and recognized the general principle:

 

With 
regard to the scope of the warranty in the context of multiple grantors, the 
general assumption is that the warranty obligation is joint, not several, unless 
specific language is included in the deed indicating that each grantor is 
warranting only his or her individual interest. 

 
 
(Citation 
omitted).  Section 289(2) of the 
Restatement (Second) of Contracts also states the general rule:  "Where two or more parties to a contract 
promise the same performance to the same promisee, they incur only a joint duty 
unless an intention is manifested to create several duties or joint and several 
duties."

 
 
[¶140] Although Gilstrap and § 289(2) stated a 
presumption of joint obligation, those authorities also recognize that the 
intention of the parties to the contract controls.  The importance of the parties' intent is 
emphasized in Restatement (Second) Contracts § 288:

 
 

(1) 
Where two or more parties to a contract make a promise or promises to the same 
promisee, the manifested intention of the parties determines whether they 
promise that the same performance or separate performances shall be 
given.

 
 

(2) 
Unless a contrary intention is manifested, a promise by two or more promisors is 
a promise that the same performance shall be given.

 
 
[¶141] We turn, then, to the contract language to 
determine whether the defendants were jointly and severally obligated to pay the 
entire NPI proceeds to the plaintiffs.  
Section 1 imposes upon all of the defendants, as successors to First 
Parties, the responsibility of paying the net profits interest.  However, subsequent provisions, 
including Section 3 (Payment) and Section 5 (Transfer), make it clear that the 
operator is responsible for accounting and actually remitting payments to the 
plaintiffs.  Because the 
non-operators have neither the responsibility nor the authority to gather the 
net profit payments from each defendant and remit to the plaintiffs, the 
contract indicates that the non-operating defendants are only responsible for 
their proportionate shares of the net profits.

 
 
[¶142] We considered a similar situation in Moncrief, 816 P.2d  at 107-08.  As we explained above, Texaco was lessee 
and working interest owner on a lease burdened by Harvey's overriding royalty 
interest; Moncrief was the operator on the lease.  Harvey brought suit against Texaco and 
Moncrief.  The district court ruled 
that each defendant was responsible for its proportionate share of the unpaid 
royalties, but Harvey argued on appeal that Texaco should have been jointly and 
severally liable for the entire amount of unpaid royalties. We concluded that, 
because each defendant owned a proportionate share of the leasehold estate, "the 
principle of proportionate responsibility is most equitable."  Id. at 108.  Considering the language of the Unit NPI 
Contract and that each defendant only owns a proportionate share of the working 
interest(s) in the NPI leases,  we conclude that the district court 
erred by making the non-operators jointly and severally liable for the entire 
NPI payment due.  We reverse the 
district court's ruling in that regard.  

 
 
H.        Did 
the district court properly grant credit to the defendants for plaintiffs' 
settlement with Questar/Wexpro?

 
 
[¶143] The district court entered judgment against all 
defendants, jointly and severally, for the NPI proceeds due from March 2006 
through December 2006$4,896,589.  
Prior to the trial, defendants Questar and Wexpro settled with the 
plaintiffs and part of the consideration for the settlement was Questar/Wexpro's 
agreement to release amounts they had escrowed over the years, 
$9,501,518.20.  The district court 
credited the defendants 30% of the judgment, or approximately $1,468,976, to 
account for Questar's and Wexpro's settlement with plaintiffs.  The district court explained that the 
30% credit was based upon the allocation method set forth in the Supplemental 
Accounting Agreement executed by the First Parties.  After the trial, the defendants filed a 
motion to alter and amend the judgment to credit the entire amount paid by 
Questar and Wexpro to the judgment against the remaining defendants, which would 
have resulted in a ruling that the defendants owed nothing to plaintiffs.  The district court denied the 
defendant's motion to alter or amend.    

 
 
[¶144] The defendants argue on appeal that, in light 
of the district court's ruling that the defendants were jointly and severally 
liable for the entire amount, it violated the "one satisfaction rule" by failing 
to credit the defendants with the entire amount of Questar/Wexpro's 
settlement.  The plaintiffs argue 
that the district court properly applied the allocation formula set out in the 
Supplemental Accounting Agreement.  
They also assert that the defendants are not entitled to a full set off 
of the Questar/Wexpro settlement amount because it included accrued net profits 
for the periods prior to and after the March through December 2006 period 
included in the judgment and consideration for other items including conversion 
of the NPI on Questar/Wexpro leases to an overriding royalty and potential WRPA 
penalties and interest.      

 
 
[¶145] Given that we ruled that the district court 
erred by making the judgment joint and several, much of the defendants' 
settlement credit argument is no longer applicable.  Moreover, we note that credit for 
settlement is "controlled by principles of equity."  Cargill, Inc. v. Mountain Cement Co., 891 P.2d 57, 67 (Wyo. 1995).   The decision to allow a set off is 
a matter of discretion with the district court and rests in the equitable 
jurisdiction of the district court.  
Id.  

 
 
[¶146] Questar/Wexpro's settlement from the escrow 
account included amounts accrued before and after the period for which the 
district court entered judgment against the remaining defendants.  In addition, the Questar/Wexpro 
settlement amount did not use the consolidated or "basket" accounting required 
by the Unit NPI Contract and upon which the judgment against the other 
defendants was based because Questar/Wexpro had only its individual net profit 
records when it calculated the net profits due and placed them in escrow.  The settlement amount also included other 
consideration, such as conversion of the NPI to an overriding royalty and 
release of any potential WRPA claims (since Questar/Wexpro were operators).  The judgment amount and settlement 
amount were not comparable. To use a colloquialism, comparing the settlement and 
judgment would be like comparing apples and oranges.  Thus, the defendants were not entitled 
to a dollar for dollar credit for the Questar/Wexpro settlement.  Nevertheless, it is clear that some of 
the settlement amount applied to the NPI during the same period covered by the 
judgment.  The district court 
properly exercised its equitable jurisdiction and discretion by applying a set 
off in the amount Questar/Wexpro would have been responsible for under the 
proportionate accounting methods included in the Supplemental Accounting 
Agreement.22  

 
 
[¶147] Finally, the defendants argue the district 
court erred by adopting the plaintiffs' expert's method for determining what 
percentage Questar/Wexpro's settlement reflected of the NPI obligation.  The plaintiffs' expert testified in the 
rebuttal portion of the trial that, under the Supplemental Accounting Agreement, 
the net profits payable by each First Party successor is determined by dividing 
that party's revenues by the total revenues attributable to the NPI leases.  Applying those principles, the 
plaintiffs' expert testified that the percentage allocable to Questar/Wexpro was 
30.17%.  The district court adopted 
the plaintiffs' allocation method and granted the defendants a 30% credit 
against the judgment for Questar/Wexpro's settlement.    

 
 
[¶148] The defendants claim the allocation method did 
not reflect the Unit NPI Contract's basic concept of allocation on the basis of 
net profits actually realized by the First Parties rather than comparative 
revenues.  While we agree that the 
Unit NPI Contract focuses on net profits, that does not change the fact that the 
First Parties agreed to use the Supplemental Accounting Agreement to allocate 
the NPI burden among themselves and the Supplemental Accounting Agreement 
allocates on the basis of revenues.  
The district court's decision to adopt the plaintiffs' expert's analysis 
was not clearly erroneous.  
Moreover, the court did not abuse its discretion by applying the 30% set 
off to the judgment for Questar/Wexpro's settlement.23   

 
 

IV.          
 Attorney Fees

 
 

A.        
Standard of review

 
 
[¶149] The resolution of whether a party is a 
prevailing party in determining entitlement to attorney fees is one of law, 
which we review de novo.  Veile v. Bryant, 2005 WY 150, ¶ 7, 123 P.3d 562, 
564-65 (Wyo. 2005).   The final 
attorney fee award is, however, reviewed for abuse of discretion.  Mueller v. Zimmer, 2007 WY 195, ¶ 11, 173 P.3d 361, 364 (Wyo. 2007).  

 
 
A 
court abuses its discretion only when it acts in a manner which exceeds the 
bounds of reason under the circumstances. The burden is placed upon the party 
who is attacking the trial court's ruling to establish an abuse of discretion, 
and the ultimate issue is whether the court could reasonably conclude as it 
did.

 
 
We 
have said that "[j]udicial discretion is a composite of many things, among which 
are conclusions drawn from objective criteria; it means a sound judgment 
exercised with regard to what is right under the circumstances and without doing 
so arbitrarily or capriciously." If the record includes sufficient evidence to 
support the district court's exercise of discretion, we uphold its decision. 

 
 

Id., 
quoting 
Hayzlett v. Hayzlett, 2007 WY 
147, ¶ 7, 167 P.3d 639, 
641-42 (Wyo. 2007) (internal citations omitted).

 
 
B.        Were 
the non-operators the prevailing parties and, therefore, entitled to an award of 
attorney fees under the WRPA?

 
 
[¶150] The district court ordered the operator 
defendants to pay plaintiffs' attorney fees, but ruled that all other parties 
would bear their own costs and fees.  
Non-operators SWEPI, Williams, Arrowhead and Lance assert that the 
district court erred by failing to award them attorney fees as prevailing 
parties pursuant to the WRPA because the district court concluded they were not 
liable for interest and penalties under that act.24  The plaintiffs respond that, even though 
their WRPA claim against the non-operators was unsuccessful, the non-operators 
were not the prevailing parties in the action and, consequently, were not 
entitled to an attorney fee award.     

 
 
[¶151] Wyoming follows the American Rule with regard 
to attorney fees.  That rule states 
that each party is responsible for its own attorney fees unless there is an 
express contractual or statutory provision that allows for such an award.  Stafford v. JHL, Inc., 2008 WY 128, ¶ 16, 194 P.3d 315, 318 (Wyo.  2008).  Section 30-5-303(b) of the WRPA includes 
the following attorney fees provision:

 
 
            
(b)  The district court for 
the county in which a well producing oil, gas or related hydrocarbons is located 
has jurisdiction over all proceedings brought pursuant to this article and the 
prevailing party in any proceedings brought pursuant to this article shall be 
entitled to recover all court costs and reasonable attorney's fees.

 
 
Pursuant 
to this provision, the "prevailing party" in "any proceedings" brought under the 
WRPA is entitled to recover its costs and fees.  

 
 
[¶152] We have defined "prevailing party" for purposes 
of awarding costs of litigation as one who "improves his or her position by the 
litigation."  Schaub v. Wilson, 969 P.2d 552, 561 (Wyo. 1998).  Looking at the litigation as a whole, it 
is clear that the plaintiffs, rather than the non-operator defendants, were the 
prevailing parties.  The plaintiffs 
secured a judgment for breach of contract against the non-operators and a 
declaration that the defendants' leases were burdened by the NPI.  The non-operator defendants did not 
succeed in their bid to have the NPI interest terminated on the basis that the 
interest ended with the Pinedale Unit.  
There is simply no question that the plaintiffs improved their position 
by the litigation and the non-operator defendants did not.

 
 
[¶153] The non-operator defendants assert, however, 
that they were the prevailing parties under the WRPA because the plaintiffs' 
WRPA claims against the non-operators were unsuccessful.   Section 30-5-303(b) provides that 
the prevailing party "in any proceedings brought pursuant to this article" is 
entitled to a fee award.  The plain 
meaning of the term "proceedings" is broad, especially when phrased in the 
plural.  Black's Law Dictionary 1324 
(9th ed. 2009) defines "proceeding" as "[t]he regular and orderly 
progression of a lawsuit, including all acts and events between the time of 
commencement and the entry of judgment.    Similarly, Webster's Third New Int'l Dictionary 
1807 (2002) defines "proceeding" in the context of law as "[l]egal action; 
litigation."  Consistent with these 
definitions, this Court broadly defined "proceeding" in the course of allowing 
attorney fees under the relevant worker's compensation statute.  Graves v. Utah Power & Light, Co., 
713 P.2d 187, 194 (Wyo. 
1986) (superseded on other grounds by statute).

 
 
[¶154] A broad reading of the term "proceedings" is 
especially apt in the context of the WRPA where the right to bring an action 
under the act is contingent upon the existence of a pre-existing contractual 
obligation.  In other words, the 
only way to bring a WRPA claim is in the course of bringing an action on the 
document which creates the right to the mineral royalty.  See, e.g., Ferguson, 884 P.2d  at 976 and 979.  So, in this case, where the non-operator 
defendants were found liable under the Unit NPI Contract but not responsible for 
WRPA penalties and interest because they were not obligated to actually remit 
the payment to the plaintiffs, it is appropriate, as a matter of law, to 
conclude that the non-operators were not the prevailing parties in the 
proceedings.  The district court did 
not err by failing to grant the non-operators attorney fees.  See also, Moncrief, 816 P.2d  at 109 (ruling that 
district court properly held the non-operator was not responsible for the 
plaintiff's attorney fees under the WRPA because it was not responsible for 
actually making payments to the plaintiff but giving no indication that the 
plaintiff had to pay the non-operators' attorney fees).  

 
 
[¶155] Furthermore, even if we were to accept the 
non-operators' argument that they were entitled to attorney fees because they 
prevailed on the WRPA claims, we would not conclude that the district court 
erred by denying them an attorney fees award.  The district court has discretion to 
award suitable fees.  If the 
non-operators were entitled to be awarded fees, it would only be for the fees 
attributable to their defense of the WRPA claim.  Although we have not been directed to 
any evidence in the record regarding the amount of fees the non-operator 
defendants paid in defense of the WRPA claim, we are confident that the amount 
would represent a relatively small percentage of their total attorney fees.  The WRPA issue involved a question of 
law that did not require factual discovery or analysis, and the appellate record 
on that issue represents a very small portion of an extremely voluminous 
record.  Thus, the district court 
could have, as a matter of discretion, appropriately denied the non-operators' 
request for fees on the WRPA claim.     

 
 
C.        Did 
the district court abuse its discretion by awarding plaintiffs over $3.9 million 
in attorney fees?

 
 
[¶156] The operator defendants, Shell and Ultra, claim 
the district court erred when it granted the plaintiffs' request for over $3.9 
million dollars in attorney fees.25  They claim the plaintiffs failed to 
properly segregate their recoverable fees from the non-recoverable fees, 
including those pertaining to: the non-operator defendants; the plaintiffs' 
"fall-back" claims including breach of the duty of good faith and fair dealing, 
conversion, slander of title, punitive damages, equitable relief and rescission; 
the settling defendants Questar and Wexpro; and claims and motions that were 
resolved in favor of the defendants.  
The operator defendants also assert that the district court abused its 
discretion by allowing fees based, in part, on an unreasonable hourly rate of 
$400.    

 
 
[¶157] We start with the operator defendants' argument 
regarding segregation of fees among claims and parties.  "[S]egregation of fees between multiple 
clients and/or multiple claims is required when it is possible."  Cline v. Rocky Mountain, Inc. 998 P.2d 946, 952 (Wyo. 2000).  However, as we stated above, the 
attorney fees provision of the WRPA is broad and allows for fees to the party 
who improves his position as a result of the litigation in any proceedings under 
the act.  To the extent that the 
operator defendants claim that the plaintiffs were only entitled to fees for the 
discrete WRPA claims, we reject that argument.  Many of the claims that the defendants 
argue should have been segregated were intertwined with the WRPA claims and the 
breach of contract claim that had to be litigated in order to recover under the 
WRPA.  For example, the plaintiffs' 
conversion, rescission, slander of title, etc., causes of action were all based 
upon the underlying issue of whether the NPI continued to burden the 
leases.  Similarly, the breach of 
the covenant of good faith and fair dealing claim was "inextricably intertwined" 
with the breach of contract claim, which was the primary claim upon which the 
entire litigation was based.  See, Hladky, ¶ 110, 196 P.3d  at 212.  

 
 
[¶158] The fact that plaintiffs may not have been 
successful on individual motions, etc., does not change the fact that they were 
the prevailing parties in the litigation as a whole.  The defendants' argument that the 
attorney fees for those matters should have been segregated reveals a 
misunderstanding of the scope of the WRPA attorney fees provision and the 
definition of prevailing party.  It 
is also noteworthy that, while the defendants assert that the fees attributable 
to various claims should be segregated and not allowed in the fee award, they do 
not provide a comprehensive analysis of why those fees are not allowable.  Although the party seeking attorney fees 
has the burden of proving its entitlement before the district court, the party 
challenging the order on appeal on the basis that the fees should have been 
segregated, has the burden of showing that the district court abused its 
discretion.  Hladky, ¶ 110, 196 P.2d  at 212-13.   The defendants have failed to 
establish that the district court abused its discretion by refusing to require 
the plaintiffs to allocate fees to specific claims.  

 
 
[¶159] With regard to the settling defendants Questar 
and Wexpro, the defendants are correct that the plaintiffs and settling 
defendants each agreed to bear their own attorney fees.  Thus, the remaining defendants should 
not be responsible for the attorney fees plaintiffs incurred in prosecuting 
their claims against those specific defendants.  Questar and Wexpro did not, however, 
settle with plaintiffs until just a couple of months before the bench trial. 
 Prior to that, many of Questar and 
Wexpro's claims and defenses mirrored those of the other defendants.  

 
 
[¶160] The plaintiffs' submission evidenced that it 
took steps to remove many items pertaining to Questar and Wexpro, especially 
when those matters did not pertain to the other defendants.  For example, they eliminated, entirely, 
fees incurred in the settlement with Questar/Wexpro and in an associated lawsuit 
between Questar/Wexpro and plaintiffs.  
The plaintiffs also reduced the fees requested in association with the 
court-ordered mediation by 30% to reflect the time pertaining to Questar and 
Wexpro.    

 
 
[¶161] As a practical matter, much of the plaintiffs' 
work pertained to all of the defendants' claim that the NPI no longer existed, 
making it impossible, and ultimately unnecessary, to separate the fees 
applicable to their claims against Questar and Wexpro and the non-operator 
defendants.  In addition, because 
the Unit NPI Contract called for consolidated accounting, revenues and expenses 
of all the defendants had to be figured into the net profit calculation.  The district court accepted the 
plaintiffs' efforts to segregate the non-applicable Questar/Wexpro fees.  On appeal, the defendants have not 
convinced us that the district court abused its discretion.

 
 
[¶162] Finally, we consider the defendants' argument 
that the fee award, as a whole, was unreasonable.  

 
 
Wyoming 
has adopted the two-factor federal lodestar test to determine the reasonableness 
of attorney fee awards. This test requires a determination of whether: 1) the 
fee charged represents the product of reasonable hours times a reasonable rate; 
and 2) other factors of discretionary application should be considered to adjust 
the fee upward or downward.

 
 

Hladky, 
¶ 
112, 196 P.3d  at 213.  The factors 
to be considered in awarding fees are set forth in Wyo. Stat. Ann. § 1-14-126(b) 
(LexisNexis 2009):  

 
 
            
(b) In civil actions for which an award of attorney's fees is authorized, 
the court in its discretion may award reasonable attorney's fees to the 
prevailing party without requiring expert testimony. In exercising its 
discretion the court may consider the following factors:

     (i) The time and labor 
required, the novelty and difficulty of the questions involved, and the skill 
requisite to perform the legal service properly;

     (ii) The likelihood 
that the acceptance of the particular employment precluded other employment by 
the lawyer;

     (iii) The fee 
customarily charged in the locality for similar legal services;

      (iv) The amount 
involved and the results obtained;

      (v) The time 
limitations imposed by the client or by the circumstances;

      (vi) The nature 
and length of the professional relationship with the client;

      (vii) The 
experience, reputation and ability of the lawyer or lawyers performing the 
services; and

      (viii) Whether 
the fee is fixed or contingent.

 
 
[¶163] The plaintiffs' fee request was very detailed 
and included the affidavits of counsel and hundreds of pages of supporting 
documentation.  The submissions 
established that, although the plaintiffs' attorneys had actually charged their 
clients over $5 million in fees, they limited their request for an attorney fees 
award to just over $3.9 million.  
One of the defendants' primary claims that the fee request was 
unreasonable involves the $400 per hour fee charged by some of the plaintiffs' 
attorneys.  They indicate that the 
fees exceed those charged by Wyoming attorneys, which should be capped at $300 
per hour.    

 
 
[¶164] While on its face that hourly fee may seem 
high, it was not charged by all of the plaintiffs' attorneys or even throughout 
the litigation by the attorneys who did charge that hourly fee.  The defendants' argument that the 
highest reasonable fee for Wyoming attorneys is $250 per hour (although they 
would not dispute hourly rates of $300 per hour) is not borne out by the 
record.  Michael J. Sullivan is, 
unquestionably, a Wyoming attorney and charged and was paid $350 per hour 
throughout the litigation.  He also 
stated in his affidavit that "billing rates of $400.00 per hour for senior 
attorneys and $300.00 per hour for experienced oil and gas litigation attorneys 
are appropriate" in Wyoming.  The 
various filings and affidavits of plaintiffs' attorneys established that this 
case involved unique and extremely complicated matters of oil and gas litigation 
and accounting.  In addition, the 
claims involved matters of obviously significant value.  We can confirm that the file in this 
case was massive and the issues were complex.  After carefully reviewing the 
plaintiffs' submissions and the defendants' responses, the district court 
concluded:

 
 
 The Court finds that the plaintiffs' 
request for attorneys' fees is fair and reasonable under the circumstances of 
this case given the nature, extent, status of, and defendants' opposition to, 
these proceedings.

 
 
Having 
dealt with this case for a very long period of time, the district court was in 
the best position to analyze the attorneys' efforts and time.  The defendants have not persuaded us 
that the district court abused its discretion in doing so.

 
 
CONCLUSION

 
 
[¶165] The district court did a masterful job of 
sifting through all of the materials and arguments to arrive at what was 
essentially a correct resolution of this case.  The proceedings and record were long and 
complicated; indeed, the record on appeal contains many thousands of pages of 
filings and transcripts.  Although 
we have found error and are reversing on a few points, we commend the district 
court on its handling of this case.  

 
 
[¶166] The district court properly granted summary 
judgment on the plaintiffs' claim that the NPI continued to encumber the 
relevant leases after termination of the Pinedale Unit.  To the extent that the district court's 
second summary judgment order stated that the plaintiffs had provided a 
sufficient showing of their ownership of the NPI to entitle them to payment from 
the defendants, we affirm.  However, 
to the extent that it was intended to quiet title in the plaintiffs against any 
claims by others who are not parties to this action, we conclude that there was 
no justiciable controversy and reverse.          
The district court properly granted the defendants' Rule 52(c) motion 
regarding the plaintiffs' obligation to give notice under Section 5 of the Unit 
Net Profits Contract and correctly ruled that Mr. Hartman's February 22, 2006, 
letter was sufficient notice under the contract to obligate the defendants to 
start paying the NPI in March 2006.  
The district court also properly granted the defendants' Rule 52(c) 
motion on the plaintiffs' claim for breach of the implied covenant of good faith 
and fair dealing and the non-operator defendants' Rule 52(c) motion on the 
plaintiffs' WRPA claims. 

   

[¶167] After the bench trial, the district court 
correctly concluded that the non-operating defendants breached the Unit NPI 
Contract, although they did not violate the WRPA.  Operating defendants Shell and Ultra 
were rightly found liable under the WRPA for interest and penalties for failing 
to pay or escrow the NPI payments after the plaintiffs' gave notice of their 
ownership of the NPI.  The district 
court also properly determined that State Lease 79-0645 is a "replacement lease" 
under the Unit NPI Contract and, therefore, burdened by the plaintiffs' NPI and 
the plaintiffs' claims were not time barred under either the statute of 
limitations or laches.   

 
 
[¶168] We hold the district court made some errors in 
its damages award.  Although it 
properly interpreted the overhead expense provisions of the First Parties' and 
Novi's agreement, it incorrectly concluded that produced gas used on the lease 
was to be included as revenue for the net profits calculation.  This aspect of the judgment is reversed 
and remanded for recalculation of the damages.  The district court also erred by making 
the non-operators jointly and severally liable for the entire judgment, and we 
reverse the district court's ruling in that regard.  The district court properly granted 
credit to the defendants for plaintiffs' settlements with Questar/Wexpro.   

 
 
[¶169] Finally, we conclude the district court 
properly determined that plaintiffs were the prevailing parties in this 
litigation and did not abuse it discretion in making its attorney fees award.

 
 
[¶170] Affirmed in part and reversed and remanded in 
part for proceedings consistent with this opinion. 

 
 

VOIGT, 
Chief Justice, 
dissenting.

 
 
[¶171]   I respectfully dissent on what I 
believe to be the two main issues:  
whether the NPI continues to exist and, if so, whether the plaintiffs 
have shown that they own it.

 
 

Continued 
Existence of the NPI

 
 
[¶172]   The answer to the question of 
whether the unit NPI survived termination of the Pinedale Unit must be found 
within the Unit NPI Contract.  
Stated in its simplest terms, the district court's conclusion was that, 
although commitment of the Exhibit A leases to the Pinedale Unit was a condition 
precedent to the obligation to pay the unit NPI, the obligation to pay the NPI 
was not conditioned upon the continued existence of the Pinedale Unit.  The district court further concluded 
that the unit NPI was lease-based, that it was akin to a royalty interest, and 
that it was a covenant running with the land.  In large part, the district court found 
the support for these conclusions in the initial Assignment Agreement, where the 
parties agreed to enter into "similar net profit contract[s]" for both the 
unitized leases and the non-unitized leases.  In addition, the district court pointed 
out numerous instances in the Unit NPI Contract where net profits were related 
to operations "on the leases" as opposed to "unit operations."  In coming to a different conclusion, I 
will discuss those provisions in more detail hereinafter.

 
 
[¶173]   I do not disagree with the district 
court and the plaintiffs that we look to surrounding circumstances when 
interpreting even an unambiguous contract involving mineral interests.  Caballo Coal Co. v. Fid. Exploration & 
Prod. Co., 2004 WY 6, ¶ 11, 
84 P.3d 311, 314-15 (Wyo. 
2004).  Neither do I disagree that, 
in some circumstances, contemporaneous transaction documents may be construed 
along with the contract at issue, as an integrated whole.  Cliff & Co. v. Anderson, 777 P.2d 595, 598-99 (Wyo. 1989); 
Busch Dev., Inc. v. City of Cheyenne, 
645 P.2d 65, 70-71 (Wyo. 
1982).  Those rules of construction 
do not apply in the instant case, however, where the parties specifically 
provided that the Assignment Agreement was to have no effect after the leases 
had been assigned and the net profits contracts had been signed.  In that regard, the Assignment Agreement 
was very much like an executory contract for sale which merges into the deed 
upon the latter's execution and delivery.  
See Wadi Petroleum, Inc. v. Ultra 
Res., Inc., 2003 WY 41, ¶ 
15, 65 P.3d 703, 710 (Wyo. 
2003); Markstein v. Countryside I, 
LLC, 2003 WY 122, ¶ 31, 77 P.3d 389, 398 (Wyo. 2003).  We must find the parties' intent in the 
two NPI contracts and in the Pinedale Unit Agreement.

 
 
[¶174]   The Area NPI Contract, which might 
seem to cast the least light on this controversy, actually helps to answer the 
primary question of whether the Unit NPI Contract was lease-based or unit-based. 
 In its first numbered paragraph, 
the Area NPI Contract defined the term "Net Profits Interest" as 
follows:

 
 
            
Subject to the conditions hereinafter set forth, First Parties agree to 
pay to Novi a sum or sums representing 5% of the net profits (as hereinafter 
defined), herein referred to as "said net profits interest," resulting from operations for oil and gas by 
First Parties, or any of them, under those certain leases shown on Exhibit A 
attached hereto and made a part hereof, such leases being herein referred to 
as "said leases."

 
 
(Emphasis 
added.)  Clearly, this net profit 
interest is to be calculated from lease-based operations.  By contrast, the term "Net Profits 
Interest" was defined in the Unit NPI Contract as follows:

 
 
            
Subject to the conditions hereinafter set forth, First Parties agree to 
pay to Novi a sum or sums representing 5% of the net profits (as hereinafter 
defined), herein referred to as "said net profits interest," resulting from operations for oil and gas by 
First Parties, or any of them, under those certain leases committed to that 
certain Unit Agreement for the Development and Operation of the Pinedale Unit 
Area and shown on Exhibit A attached hereto and made a part hereof, such 
leases being herein referred to as "said leases."

 
 
(Emphasis 
added.)  If the intent of the 
parties was to create a lease-based, rather than a unit-based, net profits 
interest in the Unit NPI Contract, there was no need for the additional language 
concerning leases committed to the Pinedale Unit.

 
 
[¶175]   Similar distinctions between the 
two contracts can be seen by comparing the "Computation" sections.  Net profits were to be computed under 
paragraph 2 of the Area NPI Contract as follows:

 
 
            
Net profits shall be computed on the basis of all operations applicable to said 
leases.

 
 
            
Net profits as used herein shall 
mean the gross revenue (not required for payment of the overriding royalties 
shown on Exhibit A and landowners' royalties) from operations allocable to said leases 
after deduction of all expenses of operations.

 
 
. 
. . .

 
 
(Emphasis 
added.)  By contrast, once again, 
net profits were to be computed under paragraph 2 of the Unit NPI Contract as 
follows:

 
 
            
Net profits shall be computed on the basis of all operations under the Pinedale Unit 
applicable to said leases.  In the 
event that leases other than said leases are committed to the Pinedale Unit, the 
manner of allocating production, revenue and expenses of unit operations shall 
be determined as provided in the Unit Agreement and such Unit Operating 
Agreement as First Parties and lessees of such other leases shall enter 
upon.

 
 
            
Net profits as used herein shall 
mean the gross revenue (not required for payment of the overriding royalties 
shown on Exhibit A and landowners' royalties) from unit operations allocable to said 
leases after deduction of all expenses of unit operations (unit operations being 
construed to include all operations of any of First Parties under said 
leases) except those charged to the working interest owners, if any, under 
the said unit other than First Parties.

 
 
            
. . . .

 
 
(Emphasis 
added.)  The express language of the 
parties leaves no doubt that the unit NPI was unit-based, and not 
lease-based.  By the very terms of 
the parties' agreement, the NPI cannot be determined without consideration of 
unit operations' revenue and unit operations' expenses.  It would seem to go without saying that, 
without any such revenue and expenses, given the demise of the Pinedale Unit, 
the NPI no longer existed.

 
 
[¶176]   The "Payment" paragraphs of the two 
contracts contain a similar distinction.  
Under the Area NPI Contract, "all accounting for the purpose of 
determining net profits hereunder shall be upon a consolidated basis involving 
all operations under said 
leases."  (Emphasis added.)  Under the Unit NPI Contract, however, 
"all accounting for the purpose of determining net profits hereunder shall be 
upon a consolidated basis involving all 
operations under said leases and the said Pinedale Unit." (Emphasis 
added.)  Once again, the unit NPI, 
unlike the area NPI, is based in Pinedale Unit accounting, and without the 
Pinedale Unit, there can be no such accounting.

 
 
[¶177]   The logic of these provisionsthat 
an NPI based upon unit operations would only exist for leases within the unitis 
directly reflected within the "Surrender" paragraph of the Unit NPI Contract, 
wherein it is provided that the First Parties may, without Novi's consent or 
approval, surrender, assign or release any lease, and that such surrender, 
assignment, or release, "shall terminate the net profits interest herein 
provided for as to the leasehold interest which is so released and 
surrendered."  In other words, the 
"departure" of a lease from the unit ends any unit-related operations on that 
lease, and therefore ends any unit-related NPI from that 
lease.

 
 
[¶178]   This concept was carried through 
into the third major agreement among the partiesthe Pinedale Unit 
Agreement.  Novi signed the Pinedale 
Unit Agreement under the heading "Other Parties," presumably because Novi owned 
no leases or working interests that were being "committed" to the Pinedale 
Unit.  Novi, it bears repeating, 
held only the NPI in most of the leases that had been committed to the 
unit.  But the central question 
remains the same when looking at the Pinedale Unit Agreement as when looking at 
the Unit NPI Contract; that is, once the leases were committed to the Pinedale 
Unit, did the NPI become permanently "affixed" to those leases?  In the sense that this question has been 
presented by the parties, the issue becomes whether the term "committed" 
describes an act that occurs at an instant in time, or an act that has a 
temporal existence until such time as it might end.  The district court opted for the former 
concept in holding that the act of commitment of a lease to the unit was simply 
a condition precedent to the parties' contract obligations.  The defendants argue herein that, within 
the industry and within these documents, the term "committed" defines the latter 
concept because leases can become "uncommitted" to a unit.

 
 
[¶179]   The Unit NPI Contract provided that 
the NPI would be calculated for those leases listed on Exhibit A and committed to the Pinedale Unit.  When the Pinedale Unit Agreement is read 
in its entirety, it becomes clear that leases committed to it were committed in 
the temporal sense mentioned above:

 
 
1.   Lands "committed" to the agreement 
were described as "unitized land" or "land subject to this 
agreement."

 
 
2.   Lands automatically eliminated 
after a period for failure to be included in a participating area "shall no 
longer be a part of the unit area and shall no longer be subject to this 
agreement."

 
 
3.   The covenants of the agreement were 
to "run[] with the land," but only "until this agreement 
terminates."

 
 
4.   Surrender or forfeiture of a lease 
resulted in that lease no longer being "committed" to the unit unless and until 
the new owner of the interest "re-committed" it to the 
unit.

 
 
[¶180]   The intent and effect of these 
provisions, and others similar to them, was that the benefits and burdens of the 
Pinedale Unit Agreement were based upon unit operations, and unit operations 
existed only so long as the unit existed.  
Inasmuch as these same unit operations were to form the basis for 
accounting in regard to the Unit NPI Contract, it is only reasonable to conclude 
that the same parties also intended that the NPI would only exist so long as 
there were unit operations from which to compute it.  Leases did not remain committed to the 
unit once removed from it through surrender or automatic termination or 
contraction of the unit, and certainly upon termination of the unit.26

 
 
[¶181]   I agree with all of the parties and 
the district court that the Unit NPI Contract is unambiguous in this regard, and 
I agree with the defendants that its unambiguous intent was to create an NPI 
that was based upon operations under the Pinedale Unit, for so long as 
operations were conducted under the Pinedale Unit, and for so long as a 
particular lease remained committed to the Pinedale Unit.  The Pinedale Unit Agreement is similarly 
unambiguous, and shows similar intent.  
Unambiguous agreements do not, of course, require construction, so it is 
inappropriate to apply rules of construction such as the rule disfavoring 
construction resulting in a forfeiture, which rule was applied by the district 
court in its analysis.  See City of Casper v. J.M. Carey & 
Bros., 601 P.2d 1010, 1014 
(Wyo. 1979).

 
 
[¶182]   Novi was not a party to the 
Supplemental Accounting Agreement entered into among the First Parties, so that 
agreement cannot be utilized to measure Novi's intent in entering into the 
Assignment Agreement or the NPI contracts.  
The district court, however, relying upon Mullinnix LLC v. HKB Royalty Trust, 2006 
WY 14, ¶ 6, 126 P.3d 909, 914-15 
(Wyo. 2006), looked to the Supplemental Accounting Agreement as a "surrounding 
circumstance" that could help to show the intent of the parties in both NPI 
contracts.  While I agree that 
"surrounding circumstances" may be utilized to help determine the purpose and 
intent of even an unambiguous contract, they may not be utilized to create an 
ambiguity within the contract, or to contradict the plain meaning of contract 
language.  Gainsco Ins. Co. v. Amoco Prod. Co., 2002 WY 122, ¶ 7, 53 P.3d 1051, 1056 (Wyo. 2002); Doctors' Co. v. Ins. Corp. of Am., 864 P.2d 1018, 1024 (Wyo. 1993).

 
 
[¶183]   This rationale also applies to the 
testimony of industry experts:

 
 
Amoco's 
endeavor to invoke the testimony of experts with respect to industry custom and 
practice in applying this language inverts our rule with respect to extrinsic 
evidence.  Instead of relying upon 
the extrinsic evidence to resolve an ambiguity, Amoco seeks to invoke the 
extrinsic evidence to structure an ambiguity.  This would amount to this Court writing 
a new contract for the parties, and we are foreclosed from that 
endeavor.

 
 

Double 
Eagle Petroleum & Mining Corp. v. Questar Exploration & Prod. 
Co., 
2003 WY 139, ¶ 11, 78 P.3d 679, 684 (Wyo. 2003) 
(quoting Amoco Prod. Co. v. EM Nominee 
P'ship, 2 P.3d 534, 541 (Wyo. 2000)).  
Partly because the summary judgment motion hearing was followed by a 
bench trial, the record in the instant case is replete with the testimony of oil 
and gas experts as to what the parties intended by their contracts.  This testimony is not available, 
however, to change the clear intention of the Unit NPI Contract to tie net 
profits to Pinedale Unit operations.   
Summary judgment should not have been granted to the plaintiffs on the 
issue of the continued existence of the NPI.

 
 
Ownership 
of the NPI

 
 
[¶184]   As noted in the majority opinion, 
the plaintiffs trace their ownership of the NPI through a series of mesne 
conveyances that must be reviewed in detail to understand the arguments of the 
parties.  To begin with, Novi merged 
into Woodson Oil Company (Woodson) on January 20, 1958.  Subsequently, Woodson defaulted on a 
loan owed to The Prudential Insurance Company of America (Prudential), and on 
November 8, 1961, Woodson conveyed to Prudential certain properties, in lieu of 
foreclosure.  Included within the 
conveyed properties were the following:

 
 
            
(i)      
All of the oil and gas leases, oil, gas and mineral leases, leasehold 
estates, mineral interests, royalty interests, overriding royalty interests, 
production payments, net profit interests, and other interests in oil, gas and 
other minerals affecting lands located in the State of Colorado, Louisiana, 
Oklahoma and Wyoming that are described in Exhibits A and Exhibits B attached 
hereto and made a part hereof for all purposes, all of which are covered by and 
subject to the Deed of Trust;

 
 
            
(ii)     All 
other oil and gas leases, oil, gas and mineral leases, leasehold estates, 
mineral interests, royalty interests overriding royalty interests, production 
payments, net profit interests, and other interests in oil, gas and other 
minerals now owned by Woodson which are located in the State of Colorado, 
Louisiana, Oklahoma and Wyoming;

 
 
            
. . . .

 
 
            
(iv)    All of the 
interest of Woodson under all contracts, operating agreements, unit agreements, 
gas contracts, rights of way, easements, surface leases,  and permits and licenses affecting any 
of the properties and interests in properties described in Exhibits A and 
Exhibits B attached hereto, including but not limited to all contracts and other 
instruments described or referred to in Exhibits A and Exhibits B attached 
thereto.

 
 
            
. . . .

 
 
EXHIBIT 
"A"

 
 
SUBLETTE 
COUNTY, Wyoming

OIL 
AND GAS LEASESPRODUCING

 
 
I.  LEASEHOLD 
INTERESTS

 
 
            
A 5% net profits interest in the Pinedale Unit, created by the Pinedale 
Unit Agreement dated April 1, 1954, by and between El Paso Natural Gas Company, 
as Operator, and Continental Oil Company et al, as Non-Operators, which net 
profits interest is created by a certain Net Profits Contract dated April 1, 
1954, by and between Malco Refineries, Inc., El Paso Natural Gas Company, 
Continental Oil Company, and Novi Oil Company, both the Pinedale Unit Agreement 
and the Net Profits Contract being filed in the Office of the Bureau of Land 
Management, Cheyenne, Wyoming; reference being hereby made to the Pinedale Unit 
Agreement, and to the record thereof in the Bureau of Land Management, Cheyenne, 
Wyoming, for all purposes, including a description of the leases subject thereto 
and the lands covered thereby, and reference being hereby made to said Net 
Profits Contract and to the record thereof in the Bureau of Land Management, 
Cheyenne, Wyoming, for all purposes.

 
 
            
. . . . .

 
 
[¶185]   Under the heading "Exhibit "B" 
Sublette County, Wyoming Oil and Gas LeasesNon-Producing," Exhibit B contained 
the description of that portion of the Lozier fee lease shown in Exhibit A to 
the Area NPI Contract, but not the description of Lease No. 019548 that also 
appears in that Exhibit A.  Clearly, 
the conveyance from Woodson to Prudential intended to transfer Woodson's 
interest in the NPI connected to the Pinedale Unit and the leases committed to 
it in the original Exhibit A, plus Woodson's interest in the area NPI as it 
related to the non-unit portion of the Lozier lease shown in the original 
Exhibit A.  The intent of the 
Woodson-Prudential transfer in regard to the non-unit portion of Lease No. 
019548 is not so clear, other than the fact that it was not included in any 
particularized description of what was being transferred.

 
 
[¶186]   Immediately upon receiving the 
above-described properties from Woodson, Prudential transferred the same to 
Texas Pacific Coal and Oil Company (TP Coal), reserving unto itself a $2,000,000 
production payment, which has since been satisfied, plus a 50% Net Profit 
Overriding Royalty Interest defined as "50% of the net profits, if any, as 
hereinafter defined, that are realized by Texas Pacific from the ownership, 
maintenance, and operation of the Woodson Properties . . . ."  The lease descriptions attached to this 
conveyance as Exhibits "A" and "B" are identical in relevant part to those 
attached as exhibits to the Woodson-Prudential conveyance.  Were it not for the reservation, it 
would be clear that Prudential transferred to TP Coal everything it received 
from Woodson.  The question becomes 
what it was, as pertinent to the Pinedale NPI, that Prudential intended to 
reserve.  It did not simply reserve 
50% of the NPI.  Instead, it 
reserved 50% of net profits realized from operation of all the Woodson 
properties.  The problem is that the 
NPI is calculated from the operations of the Pinedale Unit on the committed 
leases, whereas the 50% is calculated from the net profits realized from 
operation of all the Woodson properties.  
An example may show the difficulty:  
what happens if the Pinedale Unit leases showed a profit for a particular 
period, while the Woodson properties as a whole showed a loss?  It must be remembered that Prudential 
conveyed away the NPI, keeping only a 50% interest in the net profits of the 
Woodson properties.  Would  TP Coal, in that situation, be entitled 
to the 5% NPI from the Pinedale Unit leases' profit, while Prudential would be 
entitled to nothing, because the Woodson properties, as a whole, did not have a 
net profit?

 
 
[¶187]   On September 13, 1984, Prudential 
"assigned and conveyed" to Doyle Hartman, one of the plaintiffs herein, the 50% 
Net Profit Overriding Royalty Interest that it had reserved in its conveyance to 
TP Coal.  The Hartman plaintiffs 
identify this transaction as the source of half of their ownership of the 
NPI.  Prudential, however, did not 
own half of the NPI.  TP Coal owned 
the NPI.  Prudential reserved, and 
therefore owned, only the 50% interest in any net profits from all the Woodson 
properties.  I fail to see how the 
conveyance in 1984 transferred any part of the "ownership" of the NPI to 
Hartman. 

 
 
[¶188]   Meanwhile, on November 1, 1963, TP 
Coal conveyed to Joseph E. Seagram & Sons, Inc. (Seagram) all of the 
"mineral, royalty, overriding royalty, production payment, fee and other 
interests, rights and properties" listed in an attached exhibit, which listed 
properties included the Lozier fee lease NPI and the NPI for Wyoming state 
leases 015315, 015314, and 019548.  
The three numbered Wyoming state leases are three of the four Novi leases 
listed in the Unit NPI Contract, while the legal description for the Lozier fee 
lease combines the separate legal descriptions from the Unit NPI Contract and 
the Area NPI Contract.  The 
conveyance from TP Coal to Seagram also transferred the 
following:

 
 
            
C.    Without 
limiting the foregoing all of Grantor's right, title and interest (whether now 
owned or hereafter acquired by operation of law or otherwise) in, to and under 
all mineral, royalty, overriding royalty, production payment, fee and other 
interests, rights and properties of every kind and character insofar as the same 
cover or relate to lands located in any County, Parish or State referred to in 
Exhibit "A", even though such mineral, royalty, overriding royalty, production 
payment, fee and other interests, rights and properties be incorrectly described 
or referred to, or a description thereof be omitted in this Conveyance . . . 
.

 
 
Notably 
absent from this conveyance is any specific indication of an intent to transfer 
TP Coal's interest in the balance of the Pinedale Unit leases and the NPI 
related thereto.

 
 
[¶189]   On June 19, 1970, Seagram conveyed 
to Texas Pacific Oil Company, Inc. (TP Oil) its interests in the four Sublette 
County leases, specifically referencing the original Unit NPI Contract, and the 
Prudential-TP Coal conveyance.27  On its face, the intent of this 
transaction was to convey to TP Oil the interests Seagram received from TP 
Coal.  Ten years later, however, on 
August 29, 1980, Seagram made a second conveyance to TP Oil, this time 
conveying, inter 
alia,

 
 
all 
of Grantor's right, title, interest and estate of every nature and description, 
if any, in and to any additional oil, gas and/or mineral leases; and any other 
mineral interests held as of the Effective Date which were acquired by Grantor 
from Texas Pacific Coal and Oil Company . . . or otherwise acquired in 
connection with Grantor's oil and gas operations . . . covering lands located 
within the United States of America . . . .

 
 
Apparently, 
there was a perceived need in 1980 to clear up the Seagram to TP Oil conveyance 
with a "catch-all" transfer.  A 
"catch-all" or "cover-all" clause, sometimes called a "Mother Hubbard" clause, 
is, however, meant to extend the land description in an instrument to cover 
small contiguous parcels that may inadvertently have been omitted from a 
description.  Courts have been 
reluctant to apply such clauses to incorporate into a transaction a quantum of 
land of considerable size in relation to that actually described.   See 2 Kuntz, The Law of Oil and Gas § 22.3 (Lexis 
1989); 1 Williams & Meyers, Oil and 
Gas Law § 221.3 (Lexis 2009).

 
 
[¶190]   On August 29, 1980, TP Oil conveyed 
the following to Sun Oil Company (Delaware) (Sun):

 
 
. 
. . .

 
 
U.    The oil, gas and other 
mineral interests, rights and properties which are specifically described in 
Schedule B attached hereto and made a part hereof for all purposes . . . 
.

 
 
. 
. . .

 
 
Z.    Without limitation of the 
foregoing, all of TP's right, title, interest and estate of every nature and 
description, if any, in and to any additional oil, gas and/or mineral leases 
covering, and any other oil, gas and/or mineral interests (including surface 
estates from which such interests have not been severed) in, any land within the 
United States of America . . . . 

 
 
Schedule 
B specifically listed Lease 80034-0001, recorded at W-60564, named "TPOC," dated 
October 1, 1977, and covering certain lands in Sublette County, Wyoming.  A little over a year later, TP Oil and 
Sun entered into a Supplemental Conveyance and Agreement, made effective as of 
the date of the earlier conveyance, in which the intended conveyance was more 
specifically identified, including the NPI related to the three federal leases 
from the Unit NPI Contract, and the combined Lozier legal description from both 
NPI contracts.  As with the earlier 
TP Coal-Seagram and Seagram-TP Oil transactions, there is no specific showing of 
an intent to convey any interest in the balance of the leases originally 
committed to the Pinedale Unit.

 
 
[¶191]   On January 2, 1986, Sun and the 
Hartman group entered into a Conveyance and Agreement whereby the former 
conveyed to the latter Sun's interests in the properties it obtained from TP Oil 
on August 29, 1980, including its interests in properties in Sublette County, 
Wyoming, specifically referencing the Pinedale Unit properties and the Lozier 
lease.  It is the plaintiffs' 
position that this transaction completed its ownership of the NPI, half coming 
directly from Prudential, and half coming through the Woodson-Prudential-TP 
Coal-Seagram-TP Oil-Sun-Hartman route.  
The defendants contend, on the other hand, that neither series of 
transactions accomplished a conveyance of the Unit NPI.

 
 
[¶192]   The district court concluded that 
these conveyances unambiguously left the plaintiffs owning the NPI.  In reaching that conclusion, the 
district court applied the following law:

 
 
              
Concerning the construction and interpretation 
of the conveyances referenced above, there are a 
number of applicable legal principles.  The ultimate goal of interpretation of a 
deed is to discern the intent of the parties. Mullinnix, LLC v. HKB Royalty Trust, [2006 WY 14, ¶ 22,] 126 P.3d 909[, 919] (Wyo. 2006) and 
the nature and extent of a particular conveyance is determined by the intent of 
the parties.  Kennedy Oil v. Lance Oil & Gas Company, 
Inc., [2006 WY 9, ¶ 29,] 126 P.3d 875[, 884] (Wyo. 
2006).  Therefore, to construe a 
deed, a Court must consider the intent of the parties from the plain, 
unambiguous language utilized.  Bixler v. ORO Management LLC, [2004 WY 29, ¶ 18,] 86 P.3d 843[, 849] (Wyo. 
2004).  The focus must be on the 
entire document including the title, all parts of the deed and its terms, and 
any habendum.  Smith v. Nugget Exploration, Inc., 857 
P.2d [320,] 323[-24] (Wyo. 1993).  
If the intent of the parties can be gathered in this manner, it should be 
done so as a matter of law.  Glover v. Giraldo, 824 P.2d 552[, 554] (Wyo. 
1992).  In the absence of 
controlling factors to the contrary, doubtful language in a conveyance is to be 
treated as transferring the larger, less restricted estate rather than the 
smaller, more restricted estate.  City of Casper v. J.M. Carey & 
Brother, 601 P.2d 1010[, 
1014] (Wyo. 1979).  W.S. § 34-2-101 
provides that every conveyance of real estate shall pass all of the estate, 
unless the intent to pass a lesser estate shall appear or necessarily be 
implied.  If the intent of the 
parties does not readily appear, the language used is to be read in light of the 
surrounding circumstances and when extrinsic evidence is considered, a question 
of fact exist[s].  Gregory v. Sa[]nders, 635 P.2d 795[, 800] (Wyo. 1981), Knadler v. Adams, 661 P.2d 1052[, 1053] (Wyo. 
1983).

 
 
[¶193]   Large portions of the defendants' 
numerous briefs are taken up with the contention that the plaintiffs were not 
entitled to summary judgment as a matter 
of law because the law was incorrectly applied by the district court.  They argue, for instance, that the 
precepts of City of Casper and Wyo. 
Stat. Ann. § 34-2-101 (LexisNexis 2009) do not apply in this instance because 
the NPI, as created by the relevant instruments, is a personal property right, 
rather than an estate in land.  See Ferguson v. Coronado Oil Co, 884 P.2d 971, 975-77 (Wyo. 1994).  
Further, they note that the resolution of "doubtful language" via 
application of the larger estate/smaller estate analysis of City of Casper, being a rule of contract 
construction, may only be applied to ambiguous contracts, and if the contract 
is ambiguous, summary judgment is not available.  See Comet Energy Servs., LLC v. Powder River 
Oil & Gas Ventures, LLC, 2008 WY 69, ¶ 5, 185 P.3d 1259, 1261 (Wyo. 2008); Wolter v. Equitable Res. Energy Co., 979 P.2d 948, 951 (Wyo. 1999); Smith v. Nugget Exploration, Inc., 857 P.2d 320, 324 (Wyo. 1993); McNeiley v. Ayres Jewelry Co., 855 P.2d 1242, 1244 (Wyo. 1993); Stewman Ranch, Inc. v. Double M. Ranch, 
Ltd., 192 S.W.3d 808, 811 (Tex. App. 2006); and Painter v. Alexandria Water Co., 117 S.E.2d 674, 678 (Va. 1961).

 
 
[¶194]   Once again, this is how we review a 
summary judgment:

 
 
The 
propriety of a summary judgment is evaluated "by employing the same standards 
and by examining the same material as the district court.  We examine de novo the record, in the light most 
favorable to the party opposing the motion, affording to that party the benefit 
of all favorable inferences that may be drawn from the record.  If upon review of the record, doubt 
exists about the presence of issues of material fact, that doubt must be 
resolved against the party seeking summary judgment.  We accord no deference to the district 
court's decisions on issues of law."

 
 

Jacobson 
v. Cobbs, 
2007 WY 99, ¶ 7, 160 P.3d 654, 656 (Wyo. 2007) 
(citations omitted) (quoting Linton v. 
E.C. Cates Agency, Inc., 2005 WY 63, ¶ 7, 113 P.3d 26, 28 (Wyo. 2005)).  What that means in practical effect is 
that we must first review the conveyances to determine whether their relevant 
provisions are unambiguous.  If we 
find that not to be the case, the summary judgment must be reversed and the 
matter remanded for trial on the ownership issue.  If the conveyances are, however, 
unambiguous, we must then determine if their combined effect is the plaintiffs' 
ownership of the NPI.  This requires 
a separate analysis of the particular language of each instrument of 
conveyance.

 
 
[¶195]   No one disputes that Novi was the 
original grantee of the NPI under the Assignment Agreement, the Unit NPI 
Contract, the Area NPI Contract, and the Pinedale Unit Agreement.  Likewise, no one disputes that Novi 
merged with Woodson, with Novi's rights and interests becoming vested in 
Woodson.  On November 8, 1961, 
Woodson conveyed to Prudential, in lieu of foreclosure, numerous oil and gas 
interests in numerous states.  
Specifically included in that transfer was the NPI created by the Unit 
NPI Contract.  In the attachments to 
the conveyance, the unit NPI is listed in Exhibit A under the heading "Oil and 
Gas LeasesProducing," and the extra-unit Lozier fee lease is listed under 
"Leasehold Interests" in Exhibit B under the heading "Oil and Gas 
LeasesNon-Producing," but noting that the interest is subject to the NPI.  Combined with the conveyance language 
set forth earlier herein, this language unambiguously sets over from Woodson to 
Prudential all of Woodson's interests in the NPI.

 
 
[¶196]   On November 8, 1961, Prudential 
conveyed the Woodson properties to TP Coal, reserving unto itself a "Net Profit 
Overriding Royalty Interest," described as "an undivided 50% of all of the oil, 
gas, other hydrocarbons and other minerals that may be produced, saved and sold 
from the Woodson Interests . . . ."  
The granting clause not only specifically mentioned net profit interests, 
and specifically identified the interests described in the exhibits, but also 
contained the following "catch-all" language:

 
 
. 
. . , together with all other interests of any such character, wheresoever 
located, which have been acquired by Prudential from Woodson Oil Company . . . 
.

 
 
Attached 
to the conveyance as Exhibits A and B were the identical Exhibits A and B that 
had been attached to the Woodson-Prudential conveyance.  The relevant effect of this transaction, 
as reflected in the unambiguous wording of the instrument, was that TP Coal 
became the owner of the NPI.  
Prudential did not reserve a 50% interest in the NPI; rather, it reserved 
a 50% interest in the net profits of the Woodson 
properties.

 
 
[¶197]   In the other series of conveyances, 
the plaintiffs obtained "ownership" of the NPI only in relation to the four 
listed leases.  The leases, 
themselves, were not assigned to the plaintiffs, because Novi had already 
assigned them to the First Parties under the original agreements.  The various catch-all clauses cannot be 
seen as having morphed these transactions from conveyances of interests covering 
the specified 5,748.41 acres into conveyances of interests covering over 90,000 
acres.28  The district court erred in finding no 
holes in the plaintiffs' chain of title.  
Neither Prudential nor Sun held 50% of the unit NPI.  Prudential reserved, and conveyed to 
Hartman, a 50% interest in the net production from all the Woodson 
properties.  Sun obtained from TP 
Oil, and conveyed to Hartman, the unit NPI as it pertained to the four leases, 
less whatever interest in the NPI may be said to have been reserved by 
Prudential as part of the Woodson net profits interest.  The balance of the NPI "ownership" 
apparently remained with TP Coal.29

 
 
[¶198]   I would conclude from all of this 
that the state of the record is not such that the plaintiffs have given the 
defendants sufficient notice of their ownership of the NPI, if it exists at all, 
to require the plaintiffs to pay them millions of dollars to satisfy the 
NPI.  Summary judgment should not 
have been granted to the plaintiffs on the ownership issue.
 
 
FOOTNOTES

 
 

1Two additional defendants, Questar Exploration and Production Company and 
Wexpro Company, reached a settlement with plaintiffs and were dismissed from 
this action. 

 
 

2Because there are several appeals and cross-appeals, it is not helpful to 
identify the parties as "appellants" and "appellees."  Unless identified by name, the parties 
claiming ownership of the NPI will be identified as "plaintiffs" and the parties 
who are lessees and working interest owners will be identified as 
"defendants."

 
 

3A participating area was approved in 1957, causing the automatic 
contraction date to change to January 1, 1968.  The contraction date was extended, by 
approval of the USGS, in 1967 and 1974.    

 
 

4Throughout this litigation, the plaintiffs' interest is treated for the 
most part as being equal to Novi's 5% interest, although the plaintiffs 
acknowledge that they own only a 4.98% NPI.  A non-party owned the .02% balance, but 
it was purchased by Questar in 2007. 

 
 

5After trial, the defendants filed Defendants' Motion to Order Plaintiffs 
to Produce Newly Discovered Settlement Agreements and to Alter or Amend 
Judgment, in which it was alleged that two non-defendants, Wind River Resources, 
Inc. and Double Eagle Petroleum Company, owned working interests in the subject 
leases and had settled with the plaintiffs.  This motion was denied, and the two 
companies have not become party defendants, but the role of their settlement in 
determining damages has been raised. 

 
 

6W.R.C.P. 52(c) provides as follows:

 
 
   (c)  Judgment on partial findings.    
If during a trial without a jury a party has been fully heard on an issue 
and the court finds against the party on that issue, the court may enter 
judgment as a matter of law against that party with respect to a claim or 
defense that cannot under the controlling law be maintained or defeated without 
a favorable finding on that issue, or the court may decline to render any 
judgment until the close of all the evidence.  The party against whom entry of such a 
judgment is considered shall be entitled to no special inference as a 
consequence of such consideration, and the court may weigh the evidence and 
resolve conflicts.  Such a judgment 
shall be supported by findings as provided in subdivision (a) of this 
rule.

 
 

7There were other leases in the Pinedale Unit that were not subject to the 
NPI.  

 
 

8In their summary judgment filings, the defendants presented some 
deposition testimony from persons involved in the negotiation and drafting of 
the documents for Novi and First Parties in the 1950s.  The parts of the testimony emphasized by 
the defendants pertained to the parties' subjective intent  with regard to whether the leases had to 
be committed to the Pinedale Unit in order to be burdened by the NPI.  Such evidence is inadmissible whether 
the contract is ambiguous or not, as the subjective intent of the parties is 
irrelevant in our objective approach to contract interpretation.  Omohundro, ¶ 24, 202 P.3d  at 1084-85. 

 
 

9The defendants also claim that the district court improperly considered 
certain title opinions in concluding that the NPI continued to exist after 
termination of the Pinedale Unit.  
Although the district court mentioned the title opinions, it expressly 
ruled that they were in the "nature of expert testimony; that is, useful to the 
Court if necessary to understand the facts or evidence or legal conclusions to 
be drawnbut] not necessary or helpful [here] as that is precisely the function 
of the Court." The district court remarked that the only relevance of the title 
opinions was to establish that the defendants were aware "since, at a minimum 
1981" of the Unit NPI Contract.  The 
district court did not improperly consider the title opinions as part of its 
contract interpretation analysis. 

 
 

10The plaintiffs claim that the defendants concerns are only valid if the 
NPI is an interest in real property and it is, in fact, a contractual 
interest.  The defendants protest 
that the plaintiffs argued the NPI was a real property interest in the district 
court and cannot, now, maintain that it is only a contractual right.  Given our conclusion that the plaintiffs 
have provided evidence that the NPI vested in them and there is no evidence that 
any of the plaintiffs' predecessors reserved or currently claim any right to the 
NPI, we do not need to determine whether the interest is contractual or 
realty.  

 
 

11If defendants were truly concerned about multiple claims, they could have 
filed an interpleader action and/or initiated a proper declaratory judgment 
action naming all possible other claimants, which would have resulted in 
eliminating, as a matter of law, any possibility of multiple 
claims.

 
 

12The defendants' failure to ask for additional information stands in stark 
contrast to Questar/Wexpro's approach to the problem.   Questar/Wexpro contacted Mr. 
Hartman in 2004 seeking information about the NPI, and on February 11, 2005, 
sent a letter setting forth specific questions about the plaintiffs' title.  Mr. Hartman responded to their requests 
for additional information in a March 17, 2006, letter.    

 
 

13Although the defendants suggest that the plaintiffs also asserted a claim 
for breach of the implied covenant based in tort, the plaintiffs' argument on 
appeal focuses on their contractual claim.  
Thus, we will not discuss the requirements to establish a tort claim for 
violation of the covenant.  See, e.g., Cathcart v. State Farm Mut. Auto Ins. Co., 
2005 WY 154, ¶ 24, 123 P.3d 579, 589 (Wyo. 2005) 
(discussing the differences between the tort and contract claims for breach of 
the implied covenant of good faith and fair dealing, especially the requirement 
for showing the existence of a special relationship between the parties in order 
to recover in tort).     

 
 

14As we explained in footnote 12, the plaintiffs took over a year to put 
together their response to Questar/Wexpro's title questions.  It is not, therefore, surprising that 
the defendants did not immediately respond to Mr. Hartman's letter.  

 
 

15SWEPI 
and Williams are also non-operator defendants.  At the trial, they took no position on 
this issue because the attorneys representing them also represented operating 
defendants.  Instead, the attorneys 
stated that their clients would "simply abide" by the court's decision, although 
they also noted that their non-operator clients would stand in the same position 
as Arrowhead and Lance.  The 
district court later confirmed that its ruling applied to all of the 
non-operating defendants.  On 
appeal, SWEPI and Williams adopted Arrowhead's and Lance's responses.   

 
 

16The defendants also suggest that the statute violates the prohibition in 
U.S. Const., Art. 1, § 10, against passing laws which impair the obligations of 
pre-existing contracts.  Our ruling 
that the contract did not provide protection to the defendant operators under 
these circumstances effectively refutes their constitutional argument. 

 
 

17The Wyoming state leases apparently were not governed by the federal two 
year lease extension upon contraction of the unit.   

 
 

18The parties do not make a direct argument on appeal that "surrender" is a 
term of art in the oil and gas industry.  
We note, however, that defendants' expert witness Professor Bruce Kramer 
testified that "surrender," in the context of oil and gas law, typically entails 
"a voluntary act by the lessee" that leads to the leased interest being returned 
to the lessor.    

 
 

19It is also notable that Sun was not a successor to the First 
Parties.  Thus, plaintiffs could not 
have maintained a claim against Sun for breach of the Unit NPI Contract.    

 
 

20There is some mention in the briefs of gas "lost" before sale, but the 
parties provide no real analysis of the effect of "lost" gas on the NPI 
computation.  On remand, the 
district court can determine whether the amount of "lost" gas is significant and 
address it consistent with this opinion.   

 
 

21We reject the defendants' attempt to argue that, just by charging 
different well overhead amounts, the operator and non-operator defendants 
amended the agreement.  If we were 
to accept that argument, the contract terms would have no meaning 
whatsoever.  Such a result is 
particularly untenable in light of the specific reference in the Unit NPI 
Contract to the overhead charges provided in the accounting procedure attached 
as Exhibit C-1.   

 
 

22The defendants also argue, with little analysis, that the plaintiffs' 
settlement with Wind River and Double Eagle, who were small non-operator working 
interest holders in the NPI leases, should have been credited against the 
judgment.  The defendants do not 
support their argument with sufficient analysis of the relevant facts.   We, therefore, decline to consider 
this argument.  See, William F. West Ranch, LLC v. Tyrrell, 
2009 WY 62, ¶ 21 n.4, 206 P.3d 722, 729 n.4 (Wyo. 
2009).  

 
 

23The defendants also argue that the district court erred by failing to 
credit future Questar/Wexpro payments against the future NPI payments.  We do not have sufficient information to 
make a specific determination of how future payments (under either the NPI or 
the Questar/Wexpro overriding royalty) will be allocated or paid, other than to 
affirm the district court's decision that such payments shall be made in 
accordance with the relevant agreements.  
We will not offer an advisory opinion as to any particulars with regard 
to such future payments.  See, e.g., Voss v. Goodman, 2009 WY 40, ¶¶ 5-7, 203 P.3d 415, 
418 (Wyo. 2009) (courts cannot issue advisory opinions or adjudicate 
hypothetical questions). 

 
 

24We affirmed that district court decision in Section II.D.  

 
 

25The plaintiffs also sought more than a $1 million in costs, but the 
district court accepted the defendants' argument that the plaintiffs were only 
entitled to $32,668.93 for costs.  
The plaintiffs do not contest the costs award on appeal.  

 
 

26This view of the term "committed" as having a temporal existence is 
reflected in the Code of Federal Regulations.  Under 43 C.F.R. § 3107.3-3 (2009), for 
example, a 20-year federal lease committed to a cooperative or unit plan 
continues in force and effect beyond its expiration date only for "so long as 
committed to the plan." 

 
 

27The description of the Lozier fee lease in this conveyance again combines 
the legal descriptions of the Lozier lease listed in the exhibit attached to the 
Unit NPI Contract and the Lozier lease listed in the exhibit attached to the 
Area NPI Contract.

 
 

28The area in the TP Coal-Seagram and Seagram-TP Oil transactions totaled 
6,321.77 acres because it included the non-unit portion of the Lozier fee 
lease.  The acreage within the unit 
covered by these leases was actually only 5,748.41, as was recognized in an 
internal TP Coal memorandum.

 
 

29TP Coal is not a party to this proceeding, and I am not saying that we 
are determining ownership of the unit NPI, other than to say that these 
plaintiffs did not prove such ownership.