Boldrick v. BTA Oil Producers

BTA Oil Producers (BTA) (defendant) executed a joint-operating agreement for the exploration and development of a tract of land. Chevron USA, Inc. (Chevron) was the operator under the agreement. The agreement provided that if a working-interest holder chose non-consent status, an interest carved out of that working interest was “chargeable with a pro rata portion of all costs and expenses under the operating agreement in the same manner as if [the carved interest] were a working interest.” BTA assigned an overriding royalty interest on the land to James Boldrick (plaintiff). This overriding royalty interest was assigned expressly subject to the terms of the operating agreement. Chevron drilled a producing well on the land, but BTA elected non-consent status. As a result of this status, BTA was not entitled to payments from the well’s production until BTA paid the required non-consent penalty to Chevron. Because BTA was not receiving any royalties from the well, Boldrick also was not receiving overriding royalty payments. Boldrick brought suit to recover overriding royalties from BTA. BTA filed a motion for summary judgment, claiming that Boldrick’s overriding royalties were not payable until BTA received its own royalty payments after its non-consent penalties were paid in full. The trial court granted BTA’s motion for summary judgment, and Boldrick appealed.