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By: Paul B. Westbrook 

On September 17, 2020, HFB appellate specialist Russell Barton appeared in oral argument before the Texas Supreme Court in the case of BlueStone Natural Resources II, LLC v. Walker Murray Randle, No. 19-0459. The two issues on appeal are (1) whether an addendum to an oil and gas lease with a “gross value received” royalty provision conflicts with one pegged to “market value at the well” in the printed lease form, and (2) whether a free-use clause limiting the producer to “operations hereunder” permits the producer without paying royalties to send gas to be processed by a third party, away from the lease, that the producer in part uses to power its production operations.

HFB represents the lessors, who prevailed by summary judgment in the 335th District Court in Hood County, which was later affirmed by the Fort Worth Court of Appeals. This case is another potential significant mile marker in the royalty calculation saga Texas federal and state courts have trudged over the last several years. A number of previous decisions on this subject seem to conflict or leave significant issues unresolved, as the briefing and oral argument in this case well illustrates. There is no specific timeline for a decision from the Court, as the industry awaits and hopes for greater clarity on this subject.

Oral argument before the Texas Supreme Court can be viewed at this link:

Briefs filed in the case, including an amicus brief filed by the Texas Land & Mineral Owners Association, the National Association of Royalty Owners-Texas, Inc., and Texas Pacific Land Trust, can be found and viewed at this link: