Texas Oil and Gas Royalty Trial Begins
An oil and gas royalty trial has begun in Texas and jurors will be asked to decide if the defendant owed the plaintiff royalties or if the plaintiffs committed fraud.
M & M Resources and Energy Land Resources filed a lawsuit against DSTJ Corp in 2006, claiming the former had not received 7 months of oil and gas royalties on an area well that was later shut down. The 21 oil and gas leases were assigned to DSTJ for a .5 percent royalty. Of those leases, four were located in a region of land owned by several residents of Jefferson County, known as Blackman Tract. DSTJ, according to court papers, conducted drilling operations at the well, which was functional from October 3rd until the time it was sealed by the Texas Railroad Commission in March 2004. 
M & M Resources allege that DSTJ failed to pay any royalties to them despite their drilling operations and production from the Quail well. According to the lawsuit, this failure constituted a default of obligations under the contract.
In response, DSTJ filed a countersuit which alleges M & M Resources was “engaged in shady dealings”. The countersuit also alleges M & M included “improper lease provisions” in the agreement, effectively preventing DSTJ from pooling the tract. DSTJ claims it had to shutdown the well due to the fraudulent inclusion of the lease provisions.
Jurors will now have to decide whether M & M Resources' alleged fraud led to the well being shutdown or if DSTJ should pay M & M Resources oil and gas royalties for the 7 months between October 2003 and March 2004, when the well was functioning.
Oil and Gas Companies May Deny Royalties
Denying royalties can be done in a number of ways. Oil and gas companies may report production levels that are much lower than the actual figures in order to avoid paying royalties. They may also inflate post production expenses to wriggle out of having to pay royalties.
Landowners in Texas who lease their lands for drilling have very few options when they are denied the royalty payments that are rightfully theirs. That is because, in Texas there is no single authority in in charge of ensuring that landowners receiver their dues. Due to the lack of such authority, owners are often at the mercy of oil and gas companies who may delay and deny royalty payments. In such cases, owners may have no other option but to consult with an oil and gas attorney to receive the royalties due to them.
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