Burlington v. Texas Crude – Another Texas Supreme Court Case on Post-Production Costs
The Texas Supreme Court has denied motion for rehearing of its opinion in a case that addresses deductibility of oil and gas post-production costs in the context of an overriding royalty, writes John McFarland for the Oil and Gas Lawyer Blog.
Burlington Resources Oil & Gas Company v. Texas Crude Energy may, however, have implications for post-production-cost deductions in oil and gas royalty clauses, according to the post on the website of Graves, Dougherty, Hearon & Moody.
The dispute involved alleged breaches of a development agreement between the parties, including the deduction of post-production costs from Texas Crude’s overriding royalties.
The trial court ruled that post-production costs in the case were not deductible. But the Texas Supreme Court “reversed and remanded, holding that the language of the overriding royalty assignments permits deduction of (some?) post-production costs,” explains McFarland.
