Oil & Gas Lawyers: Royalty Owners Can Win Against E&P Operators

AUSTIN – Attorneys representing royalty owners in the explosion of litigation against energy companies are encouraged by a recent Texas Supreme Court ruling that interpreted a drilling lease as clearly excluding post-production costs from royalties.
David Drez, a partner in the Fort Worth office of Wick Phillips, won a ruling for the Hyder family of Fort Worth in a closely watched lease dispute. A sharply divided court agreed with the family that Chesapeake entities had improperly deducted post-production costs from royalties paid on gas wells located on 948 mineral acres in the Barnett Shale.

“One of the significant things about this case is the general perception – right or wrong – that a royalty owner doesn’t have a chance against an operator. Here you have a situation where the royalty owner actually does prevail,” said Drez.