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Tuesday, November 8, 2016

Ohio Supreme Court Declines to Settle Issue of Post-Production Deductions

From NGI:
The Ohio Supreme Court has decided that landowners that challenge natural gas producers about post-production costs deducted from royalty checks will have to keep heading to trial courts to resolve the issues on a case-by-case basis. 
The high court's long-awaited decision came on Wednesday after it accepted a certified question last year about whether the state follows the "at the well" rule, which allows post-production deductions, or if it follows some version of the "marketable product" rule, which limits post-production deductions, such as those for compression, dehydration and transmission. 
"Under Ohio law, an oil and gas lease is a contract that is subject to the traditional rules of contract construction," the court wrote in its opinion. "Because the rights and remedies of the parties are controlled by the specific language of their lease agreement, we decline to answer the certified question." 
So, any hope that this issue passing through the state's Supreme Court would lead somewhere has been extinguished.  Landowners who feel they are being cheated out of royalties are still in the same position they were in before the court accepted the question.

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