2017 Legislation Calling: Rehearing requested on Royalties Dispute. 3 Points to Know.

“A coalition of energy companies and oil industry leaders is asking the Texas Supreme Court to reconsider a 5-4 decision that it recently handed down against Chesapeake Energy Corp. in a royalties dispute.”

Why? What’s the big deal about this TX Supreme Court Case? OIl + Landowners = Texas & that’s what this case is all about. It required Chesapeake to pay the Hyder family of Fort Worth more than $575,00 in royalties for natural gas leases on their land. 

How did this happen? Chesapeake deducted post-production costs from royalty payments, which the Texas Supreme Court decided was improper.

What legislation would address this?  If legislation was filed to uphold the TExas Supreme Court ruling for landowners, a bill would clarify that post production costs cannot be deducted from royalty payments. 

What harm would come of this? “The court’s misinterpretation of this ‘cost free’ language will throw into dispute thousands of royalty provisions in oil and gas leases and overriding royalty instruments throughout Texas that simply describe a royalty as being a cost free share of production,” the association’s attorney Ernest Smith wrote in the motion.”

San Antonio Business Journal