Rhubarb over royalties

✍ Scribed by Henke, Michael J.

• Book ID: 102220009
• Publisher: John Wiley and Sons
• Year: 2008
• Weight: 330 KB
• Volume: 11
• Category: Article
• ISSN: 0743-5665
• DOI: 10.1002/gas.3410110510

✦ Synopsis

Rhubarb over Royalties

n the early 1980s, lurking in the background I of the take-or-pay controversies that swirled through the natural gas industry was always the question of royalty owner rights to share in the proceeds of take-or-pay payments and settlements. Major decisions concerning the right of private royalty owners to share in such settlements were the subject of comment in this space in February 1992, April 1992, and April 1993. Producers leasing acreage from the federal government thought they had obtained early relief from the specter of accountability to the Minerals Management Service (MMS) when the Fifth Circuit issued its favorable decision in Diamond Shamrock Exploration Co. v. Hodel, 853 F.2d 1159853 F.2d (5th Cir. 1988)).

Recently, however, MMS appears to have found a new interpretation of Diamond Sham- rock that has formed the basis for a systematic reexamination of take-or-pay settlements affecting MMS lessees. As a result, such producers now face a renewed threat of liability to MMS for royalties on long-forgotten payments.