Royalty Disputes

Devon Energy Corporation v. Mineral Owners Rights Coalition

Oklahoma Supreme Court ruled 6-3 that Devon Energy's deduction of gathering and compression costs from royalty payments across 14,000 STACK play wells violated the state's 2015 Gross Proceeds Act, exposing Devon to $890 million in underpayment claims. The decision turns on whether gas sold to Devon's midstream affiliate constitutes a sale at the wellhead under Oklahoma's statutory market value at the well framework, precluding post-production cost deductions under the netback calculation method.