Royalty Disputes

Ovintiv Inc. v. Sabine Royalty Trust

The Fifth Court of Appeals reversed summary judgment for Ovintiv in a dispute over a 1938 Sabine Royalty Trust conveyance, holding that 'market value at the well' language prohibits post-production cost deductions for transportation and processing between the wellhead and gas plant even when no market exists at the wellhead. The decision distinguishes pre-1960 conveyances containing 'market value' clauses from modern royalty instruments using 'proceeds' or 'amount realized' language, creating a potential carve-out from Texas Supreme Court netback methodology based on historical clause formulations.