## In the Court of Appeals Second Appellate District of Texas at Fort Worth

___________________________ No. 02

- 18

- 00424

- CV

___ ________________________

On Appeal from the 96th District Court Tarrant County, Texas Trial Court No. 096

- 289847

- 17 

### S HIRLAINE 

### W EST 

### P ROPERTIES 

### L IMITED AND 

### N ATHAN 

### K. G RIFFIN 

### , ON BEHALF OF THE 

### E STATE OF 

### L ORRAINE 

### E. W EST AND ON BEHALF OF THE 

### E STATE OF 

### S HIRLEY 

### A. W EST 

### , Appellants

V



### . J AMESTOWN 

### R ESOURCES 

### , L.L.C. AND 

### T OTAL 

### E&P USA, I NC



### . , Appellees2 Before Birdwell and Wallach, JJ.; and Gonzalez , J. 1 (Judge Gonzalez not participating) Memorandum Opinion by Justice Wallach

1 The Honorable Ruben Gonzalez, Judge of the 432nd District Court of Tarr a nt County, sitting by assignment of the Chief Justice of the Texas Supreme Court pursuant to S ect ion 74.003(h)
o f the Government Code. See Tex. Gov’t Code Ann. § 74.003(h).3 MEMORANDUM OPINION
This is a breach of contract case involving the interpretation of a natural gas lease royalty clause

. Appellants ( the L essor s ) sued Appellees ( the Lessees ) for underpayment of royalties, contend ing that the contract language unambiguous ly provides for v a luing the Lessors ’ royalty by a percentage of the market value of the
gas at the point o f sale ( wellhead ) adjust ed by certain factors set forth in the lease

r oyalty c lause , essentially render ing their royalty not subject to postproduction costs , directly o r indirectly

. 2 The Lessees contend ed that the re was no underpayment of royalties because the le ase unambiguous ly provide s that the royalty is a percentage of
the market value of the gas “ at the point of sale , ” and because the point of sale is at
the wellh e ad , the royalty is subject to deduction for postproduction costs , as reflected by the pr ice the Lessors received from their wellhead gas purchaser s . Lessors moved for partial summary judgment. Lessees moved for traditional
and no

- evidence summary judgment

. The trial court denied the Lessors ’ motion and granted the Lesse es ’ motions

. The trial court granted judgment that Lessors take nothing. In this appeal, the Lessors succinctly draw the question that is determinative

2 Chesapeake Exploration L.L.C. and Chesapeake Operating, L.L.C. were two of the Ap p ellees (Lessees) whe n this appeal was initially filed. After filing for bankruptcy , which suspend ed this appeal , they eventually settled w ith Lessors, and we granted Lessors’ unopposed motion to dismiss the two Chesapeake entities from the appeal and to r e instate the appeal a gainst the two remaining Lessees , dismissed the two Chesapeake entities, and reinstated the appeal

. Shirlaine West Pro ps., Ltd. v. Chesapeake Expl., L.L.C. , No. 02

- 18

- 00424

- CV, 2021 WL 4783171, at *1 (Tex. App.

— Fort Worth Oct. 14, 2021 , no pet. h.) (per cu riam) (mem. op. and order).4 of the case, i.e., whether the L essors ’ royalty interest is burdened with postproduction

costs. Because we conclude that the l e ase royalty clause is unambiguous and fixes the wellhead as the valuation point for the L essors ’ royalty, we hold that the L essors ’ royalty is bu rdened with postproduct ion costs. W e affirm the trial court ’ s take

- nothing
summary judgment.
I. Factual Background Shirlaine West Properties Limited ( West ) leased approximately 98.93 net
mineral acres in the Barnett Shale to Chesapeake Exploration, L.L.C. ( “ C E ” ) 3 i n early
2010

. The royalty clause in this lease states, in pertinent part , 3. As royalty, L essee covenants and agrees:

. . . (b) [1] to pay Lessor for gas including casinghead gas and other gaseous substances produced from said land and sold or used on or off the premises tw enty

- five percent (25%) of the market value at the point of sale, use or other dispositi on of all such gas. [2] The market value of all gas shall be determined at the specified location and by reference to the gross heating va lue (measured in British therm al units) and quality of the gas. [3] The market value used in the calculation of all ro yalty under this Lease shall never be less than the total proceeds received by Lessee in connection with the sale, use or other dispositio n of oil or gas produced or so ld from the leased premises. [4] The royalty reserved to Les sor hereunder shall be free and clear of all costs and expenses whatsoever, except ad valorem and production taxes. [5] By way of explanation but not limitation, it i s agreed between the Lessor an d Lessee, that, notwithstanding any language herein to the c ontrary, all oil, gas or oth er proceeds accruing to

3 Chesapeake Operating, L.L.C. (CO), on behalf of CE, was the so l e operator of the two gas wells involved in this dispute ( the Duke United 1H and Du k e United 2H wells). Subsequent to the original lease, CE as s igned an undivided 2 5% interest in all of its Barnett Shale leases , including this lease , to Tota l

. CE also assigned an undi vided 2.5% interest to Jamestown in the Duke United 1H well. In November 2016, CE assigned its remaining interest to Total. Chesape a ke, Jamestown, and T otal may be collectively referenced as Lessees

. CE administered all royalties for the Lessees.5 the Lessor under this lease or by state law shall be without deduction for the cost of producing , gathering, stori n g, separating, treating, dehy drating, compressing, processing, transporting, and marketing the oil, gas and other pro ducts produced hereunder to transform the product into marketable form; however, any such costs which result in enhancing the value of the marketable oil, gas or other products to receive a better price may be deducted from Lessor ’ s share of production so long as they are based on Lessee ’ s actual cost of such enhancements. [6] However, in no event shall Lessor receive a price that is less th a n, or mare [sic] than, the pr ice received by Lessee. [7] If Lessee realizes proceeds of production after deduction fo r any expenses of production, gathering, dehydration, separation, compression, transportation, treatment, processing, storage or marketing , then the proportionate part of such deductions shall be added to the total proceeds received by Lessee for purposes of this paragraph. [8] Lessor and Lessee hereby agree that the holding in Heritage Resources, Inc. v Nations Bank , 939 S.W.2d 118 (Tex. 19 9 6) shall have no application to the terms of this lease. 4 [Emphasis and sentence numbers added

. ] Gas was not produced under the lease until 2012. No royalties were paid under the lease until September 2015 because of a title dispu t e. CO sold the gas it produced from the leased premise s for CE and Jamestown to Chesapeake Energy Marketing, L.L.C. (CEM)

. Title to the gas so ld to CEM transferred at the custody meter at the wellhead. CEM and CO had a Base C ontract for Purchase and Sale of Natural Gas (Base Contract) , w hich established the g as price that CEM paid to CO on behalf of CE. The price was calculated as the weighted

a verage sale price (WASP) that unaffiliated downstream purchasers paid CEM in

arms

- l ength transactions less the actual postproduction costs that CE M paid to third

4 Sentence 8’s disclaimer of the holding in Heritage Resources does not affect this court’s decision. The court will look to the text of the a greement to ascertai n the royalty obligations. See Chesapeake Expl

. , L.L.C. v. Hyder , 483 S .W.3d 870, 876 (Tex. 2016 ) (op. on reh ’ g )

.6 partie s to move the gas from the wellhead to the downstream points of sale. The
reasonableness of th e WASP calculations was not challenged. C EM charged CO a 3% marketing fee. CO added that 3% fee back to the proceeds it received from CEM. 5 It is undisputed that when the Lessors signed the lease, they were aware that CO would sell the gas to an affi liated company at the wellhead. CO did not engage in post

- production activities such as compressing, transporting, processing , or treating the gas it sold to CEM at the wellhead. The gas produced from the lease required no special treatment of any kind to be sold and

tran s ported off the lease. It was lean, unprocessed , and produced at low pressure , and
it was in a marketable form at the wellhead. The gas purchased at the wellh ead by CEM went to its gathering pipeline
system , which transported the gas to int rastate or interstate pipelines. Wh ile CEM
sold some of the gas at the connection to the intra/inter

- state pipelines to third parties, CEM paid third party pipeline own ers to transport most of the gas further
downstream on transmission pipelines for sale a t a higher price to unaffiliated th ird parties. 6

5 Lessors have not been harmed by the deduction and it is not an issue in this appeal.

6 On or about August 7, 2014, West d i stributed its intere st in the Lease to Lorraine E . We st and to Nathan K. Griffin, on behalf of the Estate of Shirley A. West, in equal shares. Lorraine West died in 2016 and Griffin was appointed as her estate’s personal representative.7 Total took in kind its working interest share of the gas produced from the
lease. Total then sold its share of the gas at the wellhead to Total Gas & Power North America, Inc. (Gas & P ower). Title to the gas transfer red from Total to Gas & Power at the custody transfer meter at or near the wellhead. Total had a Base Contract for
Sale and Pu rchase of Natural Gas with Gas & Power t o purchase its in

- kind share of the gas at the w ellhead, which was the p oint of s ale. Gas & Power then move d the gas
downstream to locations for commercial resale of the gas.
Gas & Power calculate d its WASP for the gas, calculating the market

- value

- at

the

- wellhead based on its WASP adjusted to account for Gas & Power ’ s actual costs

to move the gas from the wellhead to the downstream resale points. The actual costs (postproduction costs) include d gathering and transportation costs that enhance d the

va lue of th e already marketable g as sold at the we llhead. 7
II. Standard of Review
Th is court a pplies a de novo standard of review to s ummary judgments. Travelers Ins. Co. v. Joachim , 315 S.W.3d 860, 862 (Tex. 2010). If competing summary judgment motions are file d, each p arty must b ear its burden of establishing that it is entitled to judgment as a matter of law. Tarr v

. Timberwood Park Owners Ass ’ n, Inc. ,

7 CEM and Gas & Pow e r calculate the WAS P differently: CEM calculate s the WASP based on the price that it receives from the dow nstream, third

- party sales, while Gas & Power calculates the WASP based on indices published at the downstream resale points

. This difference is n o t r elevant, however, be cause Lessors do not challenge either WASP calculation as reflected in their Owner Acc ounting Reconciliation Statement (OAR).8 556 S.W.3d 274, 278 (Tex. 2018) ; City of Garland v. Dall

. Morning News , 22 S.W.3d 351, 356 (Tex. 2000 )

. “ I f t he trial court g rants o ne motion and denies the other, the reviewing court should determ ine all questions presented and render the judgment
that the trial court should have rendered. ” City o f Garland , 22 S.W.3d a t 356

– 57 (cleaned up) ; BlueStone Nat

. Res

. I I, LLC v . Randle , 601 S.W

. 3d 848, 854 (Tex. App.

— Fort Worth April 18, 2019 ), rev’d in pa rt on other ground s, 620 S.W.3d 380 (Tex. 2021). When a motion for summary judgment presents both no

- evidence and traditional grounds, the court first reviews the propr iety of the summary judg m ent under the rule 166a(i) no

- evidence standards. Lightning Oil Co

. v. Anadarko E&P Onshore, LLC , 520 S. W .3d 39, 45 (Tex. 2017); Ford Motor Co. v. Ridgway , 135 S.W.3d 598, 600 ( Tex. 20 04). If a non

- movant failed to produce more tha n a scin tilla of
evidenc e under the no

- evidence standards, there is no need to analyze w hether a

movant ’ s summary judgment proof satisfied the burden related to traditional summary judgment motions. Blackard v. Fairview Farms Land Co. , 346 S.W.3d 861, 868 (Tex. Ap p.

— Dallas 2011, n o pet.). We consider the evidence in the light most favorable t o the non

- movant, indulging every reasonable inference from the evidence in that
party ’ s favor. Sudan v. Sudan , 199 S.W.3d 291, 292 (Tex. 2006); Blackard , 346 S.W.3d at
868.
Th e movant in a t r aditional summary judgment bears the burden of proving
there is no genuine issue of material fact regarding at least one essential element of the9 cause of action being asserted and that it is entitled to judg ment as a matter of law.
Tex. R. Civ. P. 166a(c ) ; Nassar v. Liberty Mut. Fire Ins. Co. , 508 S.W.3d 254, 257 (Tex

. 2017). When reviewing a traditional motion for summary judgment, the court reviews
the evidence in the light most favorable to the non

- movant, indulge s every reasonab le
infer ence in favor o f the non

- movant, and resolve s any doubts against the motion. Lig htning Oil Co. , 520 S.W.3d at 45; City of Keller v. Wilson , 168 S.W.3d 802, 824 (Tex. 2005).
III. Rules of Contract Construction
Contract language which can be given a certa in or de finite meaning is unambiguous. In that situation, the court interprets the contr actual language as a
matter of law. DeWitt C n ty . Elec. Coop., Inc. v. Parks , 1 S.W.3d 96, 100 (Tex. 1999); Castillo Info. Tech. Servs. , LLC v. Dyonyx, L.P. , 554 S.W.3d 41, 45 (T ex. App.

— Houst o n [1st Dist.] 2017, no pet.). Contract language is not ambiguous simply because it is
unclear or because the parties “ assert forceful and diametrically opposing interpretations. ” In re D. Wilson Constr. Co. , 196 S.W.3d 774, 781 (Tex . 200 6) (orig.
proc e eding); DeWitt C n ty . Elec. Coop. , 1 S.W.3d at 100. An ambiguity aris es only after the application of established rules of interpretation leave s the language susceptible to
more than one reasonab le meaning. DeWitt C n ty

. Elec. Coop. , 1 S. W.3d at 100. An oil

an d gas lease is a contract , and its terms are interpreted according to rules of contract
construction. Tittizer v. Union Gas Corp. , 171 S.W.3d 857, 860 (Tex. 2005); BlueStone ,10 601 S.W.3d at 854

– 55

. The rules of construction applicable to oil a nd gas lease

cont r acts were aptly summarized by this court in BlueStone :

“ In con struing an unambiguous oil and gas lease,

. . . we seek to enforce the intention of the parties as it is expressed in the lease. ” [ Titt izer , 171 S.W.3d at 860]

. “ We giv e terms their plain, ordinary, and generally accepted meaning[s] unless the instrument s hows that the parties used them in a technical or different sense. ” Heritage Res., Inc.

. . . , 939 S.W.2d [at] 121

. . . .

“ We examine the entire lease and attemp t to harmonize all it s parts, even if different parts appear contradictory or inconsistent. ” Anadarko Petroleum Corp. v. Thompson , 94 S.W.3d 550, 554 (Tex. 2002) (citing Luckel v. White , 819 S.W.2d 459, 461 (Te x. 1991)). A court examines all of the lease ’ s prov isions “ because w e presume that the parties to a lease intend every clause to have some effect. ” Id. (citing Heritage Res. , 939 S.W.2d at 121). Finally, we “ cannot change the contract merely because we or one of the parties comes to dislike its provis ions or thinks that s o mething else is needed in it. ”
BlueStone , 601 S.W.3d at 855

. IV. Analysis
L

ike BlueStone , this case is yet another episode in the endless struggle in the oil and gas context between lessors and lessees in the allocation of post

- production cost s
in the calculation of r oyalty payments. We addressed the basic structure of oil and ga s lease royalty terminology in BlueStone and encourage its review for the historical legal background of t he treatment of oil and gas lease royalty clauses

. For now, we wil l focus on three ma i n principles. First, a mineral lease is a contract and is govern ed by the rules of contract law. Id. at 854

– 55. Second, oil and
gas lease law, though framed in contract terms , has developed unique legal11 interpretations of royalty cl ause s , which can make u n derstanding these contracts
difficult for the unwary. See i d. at 855

– 60. Third, even though the se unique applications may make words and phrases about royalties mean something different than they would appear , or maybe mean nothing at al l, the parties may a gree to alter
those unique meanings by the terms of their contr act. The ultimate answer in each

case depends on whether the words used clearly express the intent of the parties to deviate from the traditional meanings. Burlington R es . O il & Gas Co

. v. Tex

. Crude Energy, LLC , 573 S.W.3d 198, 204 (Tex. 2019) ; Heritage R es. , 939 S.W.2d at 12 1 ; BlueStone , 601 S.W.3d at 867 ; see also Warren v. Chesapeake Expl

. , L.L.C , 759 F.3d 413,
41 5 (5 th Cir. 2014).
A r oyalty is generally defined as t he la ndowner ’ s share of p roduction. Although not subject to the costs of production, a r oyalt y is usually subject to post

- production
costs such as taxes, treatment costs to render the gas marketable , and transportation

costs. However, the parties may alter th is general rule by ag r eement. Burlington Res

. , 573 S.W.3d at 20 3 ; Heritage Res

. , 939 S.W.2d at 121

– 22. Royalties that are calculated
based on market value at the well head generally burden the lessor ’ s royalty with a proportionate share of postproduction costs. B urlington Res

. , 573 S.W.3d at 20 4 ; Heritage Res

. , 939 S.W.2d at 12 2

– 2 3

. In leas es that value the lessor ’ s royalty based on
market value at the wellhead, provisions that purport to deduct or exempt postproduction costs from the lessor ’ s royalty are consider ed mere surplusage. He r itage
Res

. , 939 S.W.2d at 123 ( holding that, in market

- v alue

- at

- the

- well lease , royalty12 language reciting that lessor ’ s royalty interest would be free and clear of , or without deductions for, postproduction costs was mere su rplusage) ; s ee also Burlington R es . , 573 S.W.3d at 204 (overriding royalty interest assi gnments which required oil or gas to be delivered “ into the pipeline ” fixed the valuation point at the wellhead , which
allowed the lessee to deduct postproduction costs from the overriding royalty de s pite language that the royalty would be free o f post prod uction costs and a valuation clause providing that value from a sale on or off the lease would be based on the “ amount realized ” from the sale of such oil or gas in arm s

- length transactions ).
However , courts have upheld the right of lessors and l essees to contract for a lessor ’ s royalty to be free of postproduction costs. Two examples are “ proceeds ”
leases and “ amount realized ” leases

. A proceeds lease is found in Hyder , involvin g separate oil and g as royalty clauses

. 483 S.W.3d at 871. The lessor ’ s oil roy alty, according to the Texas Supreme Court, bore postproduction costs because it was paid

on the market value of the oil at the wellhead. Id

. at 873. By contrast, t he g as royalt y language provided for a roya l ty of “ 25% of the price actually received by Les see ” and further provided that the “ royalty [was] expressl y free and clear of all production and
post

- production costs and expenses ” and list ed examples of such expense s. Id. at 87 1

– 72. The C ourt said that [t] he gas roya l ty in the lease does not bear postp roduction costs because it is based on the price Chesapeake actually receives for the gas through its affiliate, Marketing, after postproduction costs have been pa id

. O ften referre d to as a “ proceeds lease , ” the price

- re c eived basis for payment in the leas e is sufficient in itself to excuse the lessors from bearing13 postproduction costs. And of course, like any other royalty, the gas royalty does not share in production c osts. But th e royalty provision expressly adds that t he gas royalty is “ free and cl ear o f all production and post

- production costs and expenses, ” and then goes further by listing them. This addition has no effect on the meaning of the provision. It might b e regarded a s emphasizing the cost

- free nature of th e gas royalty, or as surplusage

.

. . . . The gas royalty does not bear postproduction costs, not because it is based on a volume other than full production, but because the amount is based on the price ac tually recei ved by the lessee, not the market valu e at the well.
Id. at 873 , 875 (footno tes omitted)

. From this we see that the operative language is the

“ actual proceeds received ” language, the “ free and clear ” language being either surplusage or mere emp hasi s language. Likewise, “ amount realized ” clauses require the calculation of the royal ty based
on the amount the lessee receives under its contract for the sale of the gas. Bowden v. Phillips Petrol

. Co. , 247 S.W.3d 690, 699 (Tex. 2008). As noted by the Fifth Circuit in
Warren , The Warrens ’ leases provide in the pre

- p r inted royalty clause t hat they are entitled to 22.5% “ of the amount realized by Lessee, computed at the mouth of the well. ” As the Warrens recognize in their brief, the term

“ amount realized ” “ req uire[s] measurement of the roya lty based on the amount the l essee in fact receives under its sales contract for the gas. ” Had the lease provided only that the Warrens are to receive 22.5% of the amount realized by Lessee, there would be little questi on tha t the Warrens would be entitled to 22.5% of the sales contr a ct price that the less ee received, with no deduction of post

- production costs. But that is not what the lease provides.14 759 F.3d at 41 7

. The court then went on to point out that the “ compute d at t he
mouth of the well ” language rendered the proceeds to be net of postproduction c osts. We must now apply these principles to the West lease. Sentence s 1 and 2 of th e royalt y clause (the third numbered paragraph ) set the direction for the ultimate

ou tcome of the dispute. They state that Lessee agrees [1] to pay L essor for gas including casinghead gas and other gaseous substances produced from said land and sold or used on or off the premises twenty

- five percent (25%) of the market value at the point o f sale , use or other disposition of all such gas. [2 ] The marke t value of all gas shall be determined at the specified location and by reference to the gross heating value (measured in British thermal units) and quality of the gas. [Emphasis and sentence n umbers added.]
Th e s e sentence s fix market value as t he measure o f value and set the loca tion
of the value at the point of sale. It is uncontroverted that the point of sale of the gas
in question was at the wellhead. A lease need not use the words “ at the w ellhea d ” to expressly fix the location

. As the Texas Supreme Co u rt noted in Burlington R esources , To sum up, the Valuation Clause [of the lease in question] specifies that the royalty payment shall be calculated based on the “ amount realized ” from the sale , but th e agreements also provide that the royalty interest sha l l be delivered “ into the pipelines, tanks, or other receptacles with which the wells may be connected. ” In the context of these agreements, this latter term fixes the royalty ’ s valuation point at th e physical spot where the interest must be delivered

— at t h e wellhead or nearby.
57 3 S.W.3d at 21 1

. Having established that the agreements provided for royalty payments on the amount realized from the sale of the gas at the pipeline, the C ourt held th at “ [t ] his gives Burlington the right to subtract post

- product i on costs from the

‘ amount realized ’ in downstream sales prices in order to calculate the product ’ s value15 as it flows ‘ into the pipelines, tanks or othe r receptacles with which the wells may be

connec ted. ’” Id

. Having established that the West lease is a m a rket

- value

- at

- the

- well le ase, we can evaluate the impact of the other provisions of the royalty clause. Sentences 4 , 5 , and 6 are the types of provisions that in “ market

- value

- at

- the

- well ” roya lty pr ovisions

are considered surplusage , or restatements of e x isting law, as a matter o f law. Heritage
Res. , 939 S.W.2d at 1 22

– 23. As stated by Justice Owen in her c oncurring opinion in Heritage Resources , There is little doubt that at least some of the p arties to these agreements subjectively intended the phrase a t issue to have meaning. Ho wever, the use of the words “ deductions from the value of Lessor ’ s royalty ” i s circular in light of this and other courts ’ interpretation of

“ market value at the well

. ” The concept of “ deductions ” of marketing costs from t he value of the gas is meaningless when gas is valued at the well. Value at the well is already net of reasonable marketing costs. The value of gas “ at the well ” represents its value in the marketplac e at any given point of sale, less the reasonable cost t o get the gas to that point of sal e, including compression, transportation, and processing costs. Evidence of market value is often comparable sales, as the Court indicates, or value can be proven by th e so

- called net

- back approac h, which determines the p r evailing market price at a given p oint and backs out the necessary, reasonable costs between that point and the wellhead. But, regardless of how value is proven in a court of law, logic and economics te ll us that there are no mark eting costs to “ deduct ” f r om value at the wellhead.
939 S.W. 2d at 130 (Owen, J. concurring).
We turn next to sentences 3 and 7 of the third numbered paragraph of the
lease

. Sentence 3 reads , “ The market value used in the calcu la tion of all royalty under
this Lease shall never be l ess than the total proceeds receive d by Lessee in connection16 with the sale, use or other disposition of oil or gas produced or sold from the leased premises. ” There is no dispute that Lessees have paid L essors their royalties using not less than the total proceeds received by Lessees. This, of course, leads to the central dispute in the case, which revolves around Sentence 7 . Sentence 7 read s , “ If Lessee realizes proceeds of production after deduction f o r any expenses of production, gathering, dehydra tion, separation, compression, transporta tion, treatment, processing, storage or marketing, then the proportionate part of such deductions shall be added to the total proceeds received by Lessee for purposes o f this paragraph. ” Lessors contend that by L ess ees selling the gas to Gas & Power and CE M with postproduction costs deducted from t he purchase price, Lessees realize proceeds after deduction for expenses identified in Sentence 7 , and Lessors are th e refore entitle d to have these expenses added back into the “ total proceeds ” to be used for calc ulating royalties under Sentence 3. Such an interpretation would create an internal conflict
between the market

- value

- at

- the

- well provision s in Sentences 1 and 2 and th e combin ation of sentences 3 and 7 to form a “ total proceeds ” lease. This interpretation would effectively convert a market

- value

- at

- the

- well lease into a “ total proceeds ” lease, which is not consistent with precedent. As noted by the Texas Supreme Court
i n Burlington Resources , We have never construed a contractual “ amount realized ” valuatio n method to trump a contractual “ at the well ” valuation point. To the contrary, prior decisions suggest that when the parties specify an “ at the17 well ” valuation point, the royalty holder must share in post

- production costs regardless of how the royalty is calculated. This is generally the case even when the agreement calls for payments based on the “ amount realized ” or “ proceeds. ” Allowing the holder of an “ at th e well ” royalty to escape his responsibility for post

- production costs would improperly convert the royalty interest from a royalty on raw products at the well to a royalty on refined, downstream products. 573 S.W.3d at 20 5 (internal citations omitted).
I n constru ing a lease, courts will “ examine and consider the entire writing in an
effort to harmon ize and give effect to all the provisions of the contract so that none
will be rendered meaningless. ” Valence Operating Co. v. Dorsett , 164 S.W.3d 656,
662 (Te x . 2005); accord Hysaw v. Dawkins , 483 S.W.3d 1, 4 (Tex. 2016); Heritage Res. , 939 S.W.2d at 121; Westport Oil & Gas Co

. , L.P. v. Mecom , 514 S.W.3 d 247, 251 (Tex. App.

— San Antonio 2016, no pet.). Remembering that Sentences 1 and 2 provide that
market valu e is at th e point of sale, not necessarily at the well, other potential sales at
other points migh t appropriately fall within the ambit of Sentence 7. But we are not presented with such facts and need not prognosticate about them. F or this circumstance, Se n tence 7 i s simply not applicable and cannot be used by Lessors to avoid sharing postproduction co sts in a sale at the well which they have agreed to
value at the well

. See Burlington Re s . , 573 S.W.3d at 206. Lessors rely heavily on the Supreme Court ’ s opinion in Hy der

. This reliance is misplaced. The Hyder holding concerns an overriding royalty interp retation. Overriding royalties, like royalties, are generally not subject to costs of production but

are generally subject to postproduction costs. 483 S. W .3d at 872. T he Hyder lease18 provided for “ ‘ a perpetual, cost

- free (except only its portion of product ion taxes) overriding royalty of five percent (5.0%) of gross production obtained from
directional wells drilled on the lease but bottomed on nearby land

. ’ ” I d. Althoug h the Court held that the overriding royalty created by this language was free of
postpr oduction costs, its rationale was never clearly explained. What is clear is that the Hyder overriding royalty language did not value the royalty on the mar k et value at the
well. Thus, Hyder does not control in this case.
V. Conclusion
Lessors ’ only cause of a ction against Lessees is for breach of contract. Less ee s filed no

- evidence motions for summary judgment based on no evidence of breach of

an agreement and no evidence o f damages, both of which are elements of Lessors ’ actions against Lessee s . See City of C olony v. N. T ex . Mun. Water D ist. , 272 S.W.3d 699, 739 (Tex. App.

— Fort Worth 2008, pet. dism ’ d). The trial court granted the no

evidence motions. Finding the lease agr eement unambiguous, no evidence of breach
of the lease agreement , and no damages caused by any alleged breach, we affirm the
take

- nothing summary judgment in favor of Lessees Jamestown Resources, L.L.C. and Total E&P USA, Inc. Having affirmed the granting of the no

- evidence motion s , we need n o t a ddress the traditional motions for summary jud gment. See Ridgway , 135 S.W.3d at 600 ; Solano v. Landamerica Com. Title of Fort Worth, Inc. , No. 02

- 07

- 152

- CV, 2008 WL 5115294, at *4 (Tex. App.

— Fort Worth Dec. 4, 2008 , no pet.) (per19 curiam) (mem. op.). We aff irm t he trial court’s judgment f or Jamestown R esources,
L.L.C. and Total E&P USA, Inc

.

/s/ Mike Wallach Mike Wallach Justice

Delivered: November 18, 2021