Source: https://www.energyandthelaw.com/category/royalty-disputes/
Timestamp: 2019-04-20 18:35:53+00:00

Document:
Burlington Resources Oil & Gas Company, LP. v. Texas Crude Energy, LLC et al is another chapter in the back-and-forth over deduction of post-production costs from royalty payments. In “clarifying” (royalty owners might say “retreating from”) Chesapeake Exploration & Production, LLC v. Hyder, the Texas Supreme Court held that a royalty delivered into the pipeline or tanks is akin to a royalty delivered “at the wellhead.” The lessee was entitled to deduct post-production costs from its royalty calculation, notwithstanding that the calculation was based on the “amount realized” from downstream sales.
Apache Resources, LLC (n/k/a “Pueblo Resources, LLC.” Wonder why?) is Apache Corporation.
Plains Natural Resources, LLC is Plains Exploration & Production Company.
Ridge Natural Resources, LLC is Oak Ridge Natural Resources, LLC.
Range Royalty, LLC is Range Resources Corporation.
Coke or Pepsi? Elvis or the Beatles? Should there be a designated hitter? Fixed or floating royalty? Among the great debates of recent decades, few have proven quite as frustrating as the great “Fixed v. Floating” royalty debate in Texas jurisprudence.
Who is a “Payor” Under the Texas Natural Resources Code?
You’ve secured the right leases. You’ve drilled nice wells in the right locations. Now, who will pay the royalty owners? Follow Devon Energy Production Company, L.P. v. Apache Corporation, to be sure.
The duty to pay lessor royalties was owed by their lessee, not the operator of the wells.
Issues surrounding the legality of allocation wells in Texas have been percolating for some time, and lately we’ve heard of potential litigation. So, what’s the fuss about? The results in Klotzman (a Texas Railroad Commission dispute) and Spartan et al v. EOG (a district court case) didn’t resolve the legal questions. Both settled before a ruling. Browning Oil Company v. Luecke provided theoretical underpinnings but didn’t go far enough.
*Kind of; this is a federal court predicting what the Ohio Supreme Court would do.

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