Wick Phillips has won a significant oil and gas appeal and a judgment in excess of $1 million against Chesapeake Exploration on behalf of a group of Fort Worth-based leaseholders.
On March 5, 2014, the Fourth Court of Appeals of Texas in San Antonio issued a unanimous decision in Chesapeake Exploration, LLC v. Hyder (No. 04-12-00769-CV), ruling that the owners' lease prohibited deduction of all post-production costs and expenses.
The court also ruled that certain overriding royalty interests were free of all costs and expenses, and rejected Chesapeake's argument that industry customs made overriding royalties subject to post-production costs. The court of appeals stated in its opinion "[w]hile we acknowledge an overriding royalty is normally subject to post-production costs, we also acknowledge Texas law allows the parties to modify this default rule."