The underlying purpose of the oil and gas lease is to grant one’s minerals to another for the purpose of risking time and capital to explore for and produce hydrocarbons. Created without a predetermined lifespan, the oil and gas lease commences a relationship between lessor and lessee that may last for decades, often surviving the succession of interests on both sides. The one constant contact between the lessor and lessee is the payment of royalty on production. Of the various types of disputes that can arise between lessor and lessee, arguably the most common includes whether royalty payments have been properly paid. With the proliferation of custom royalty clauses applied to multi-phase and multiproduct hydrocarbon production that is transported and processed via complex delivery systems and marketing arrangements, answering the question of proper payment can be challenging […]
How Free is Your Royalty? Disputes Over Royalty Clauses
July 23, 2025