Texas Supreme Court Holds "Free of Cost Forever" Language Subject to Postproduction Cost Deductions Under Market Value at the Well Framework

The Texas Supreme Court reversed the San Antonio Court of Appeals in Fasken Oil and Ranch Ltd. v. Puig, holding that a 1960 nonparticipating royalty reservation containing "free of cost forever" language does not create an exception to postproduction cost deductions under Texas's market value at the well framework. The Court distinguished Chesapeake v. Hyder by ruling that "free of cost forever" merely restates the default rule that royalty owners bear postproduction costs when royalties are valued at the wellhead, with "forever" operating as a temporal rather than geographic modifier.