In a rather complex case involving how much an oil and gas company must pay the mineral owners in royalties, the West Virginia Supreme Court ruled today in favor of the mineral owners.
Three private individuals owned about 75 percent of the oil and gas rights under certain property in Doddridge County. The oil and gas has been leased to various companies since 1906. Presently, the lease is held by EQT Production Company ("EQT"), a company who has been in Webster County for the past several years buying up oil and gas leases.
Under West Virginia law, when a lease is as old as is the one in this case (dating back to 1906), the oil and gas company must pay the mineral owners a royalty of one-eighth of the value of the oil and gas extracted regardless of what the old lease may have said. In this case, greedy EQT tried to get around paying the mineral owners their full one-eighth royalty by deducting from that one-eighth royalty all types of post-production costs incurred after the oil and gas was extracted (such as refining, transporting, etc.).
The West Virginia Supreme Court ruled against EQT, concluding that the mineral owners are entitled to their one-eighth royalty without any deductions.
The full text of the Court's opinion can be found at this link: Gas Companies Lose
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