Potts, et al. v. Chesapeake Exploration, L.L.C.

Lessors appealed the district court's grant of summary judgment in favor of the lessee, Chesapeake, in this dispute over oil and gas lease royalty provisions. The court concluded that the value of the lessors' royalty is a percentage of the market value at the point of sale, which in this case is at the well; a "net-back" method of calculation does not "burden" or reduce the value of the royalty; Chesapeake has sold the gas at the wellhead and that is the point of sale at which market value must be calculated under the terms of the lessors' lease; and the Texas court's decision in Heritage Res., Inc. v. NationsBank, remains binding law. Therefore, the court affirmed the judgment of the district court. View "Potts, et al. v. Chesapeake Exploration, L.L.C." on Justia Law