Texas Supreme Court Limits Lessee Duties in Royalty Calculations, Holds Market Price Determined by Arm's-Length Sales

Texas Supreme Court affirmed that Fasken entities properly calculated royalties on net revenue after deductions under lease agreements requiring payment on market price at the well, rejecting Mabee Ranch's argument that lessees owe fiduciary duties to maximize sales prices in arm's-length transactions. The ruling establishes that market value at the well for royalty purposes must be determined by actual third-party sales prices rather than internal valuations, foreclosing claims that operators breach duties by failing to obtain hypothetically higher prices.