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8 posts · Terms & Connectors search
Texas Supreme Court Clarifies 'Free of Cost' Language Does Not Shield NPRI from Post-Production Costs When Royalty Valued at Wellhead
Joel Reese | Jul 20, 2026
… property free of cost forever." Fasken valued the royalty at the wellhead, deducting post - production costs from the downstream sales price to calculate the NPRI owners' payments. The Dispute The Puig parties challenged Fasken's valuation methodology, arguing the deed's "free of cost forever" language entitled them to royalties calculated on the processed gas sold downstream …
Western District of Texas Applies Heritage Framework to Production Sharing Agreement's No-Deductions Clause in Reeves County Royalty Dispute
Joel Reese | Jul 20, 2026
… the well" royalty clause, which under Texas law permits the operator to deduct post - production costs when computing royalty payments. However, the PSAs contain what Plaintiffs characterize as a "no- deductions clause" stating that "[Plaintiffs'] share of production shall be without deduction of any pre-production or post - production costs , including without limitation (a) any …
Texas Supreme Court Lets Stand Ruling That Affiliate Wellhead Sales Render Anti-Deduction Lease Language Surplusage
Joel Reese | Jul 06, 2026
… Legal Issue The case presented a narrow but consequential question: whether anti- deduction lease language retains operative effect when the lessee's affiliate transaction structure eliminates post - production costs between the wellhead and the point of sale. Crowley contended the lease language entitled it to royalties calculated on downstream proceeds without any cost deductions , regardless of …
Texas Supreme Court Authorizes Netback Method for "Market Value at the Well" Royalty Clauses in $340 Million Barnett Shale Dispute
Joel Reese | Jun 02, 2026
Background Coterra Energy Inc. and XTO Energy Inc. litigated the deductibility of post - production costs under oil and gas leases covering Barnett Shale properties. The dispute centered on approximately $340 million in royalty payments where XTO, as operator, deducted gathering and compression costs incurred between the wellhead and downstream points of sale. The leases at …
Western District of Texas Grants Partial Summary Judgment on Post-Production Cost Deductions in Dimmit County Royalty Dispute
Joel Reese | Jul 20, 2026
… 1,014.76 acres in Dimmit County, Texas, challenged INEOS and Chesapeake's deduction of post - production costs from its 25% royalty share under a mineral lease. The Western District of Texas granted partial summary judgment for the lessor, finding that lease provisions requiring deductions to be "added to the price received by Lessee" prohibited the …
Tyler Court Affirms Jury Verdict on Natural Resources Code Disclosure Requirements in East Texas Royalty Dispute
Joel Reese | Jul 20, 2026
… sold. Without any itemized amount other than "0.00" for the fee deduction on the 2020 check stubs, coupled with the fact that the Davises shared post - production costs , the Davises surmised that Scona and AUBR kept production profits to which they were not entitled and concealed their malfeasance by fabricating the amount of the …
Texas Supreme Court Reverses on 'Free of Cost Forever' NPRI Clause, Permits Post-Production Cost Deductions in Webb County Dispute
Joel Reese | Jul 06, 2026
… full sales price obtained for processed gas at downstream markets, without any deduction for postproduction costs. The trial court granted summary judgment for the Puigs, and the San Antonio Court of Appeals affirmed, relying on Chesapeake Exploration, L.L.C. v. Hyder. The trial court certified an interlocutory appeal on the controlling question: "Does the …
Texas Appellate Courts Apply Heritage Resources to Defeat 'Free of Cost' Addenda in Market-Value-at-the-Well Leases
Joel Reese | Jul 14, 2026
… typically the wellhead—and that costs incurred beyond that point are not ' deducted ' from royalties but rather never factor into the initial valuation. Under this analysis, post - production costs are expenses incurred to create value beyond the wellhead. The addenda's 'free of cost' provisions thus operate as surplusage: they purport to eliminate costs that are …