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Followwill v. Merit Energy Co.
United States District Court for the District of Wyoming
371 F. Supp. 2d 1305 (D. Wyo. 2005)
The United States Bureau of Land Management issued oil and gas leases on federal lands to C & K Petroleum Inc. (C&K), the predecessor in interest to Merit Energy Company (Merit) (defendant). The oil and gas leases stated that the leases were issued subject to the federal Mineral Leasing Act and federal regulations, and that any royalties resulting from the leases were to be calculated under federal regulations. Dorman Followwill and Dennis Irwin (plaintiffs) signed an agreement with C&K to provide C&K with exploratory geological services in exchange for overriding royalties on the lands. The agreement stated that the overriding royalties were “to be computed and paid in the same manner as the corresponding lessor’s royalty.” The assignments of the royalties stated that royalties would be paid for gas sold under the terms of the underlying leases. The plaintiffs brought suit against Merit, alleging that the overriding royalties being paid to the plaintiffs were not computed in compliance with the Wyoming Royalty Payment Act (WRPA), and were thus deficient. Merit filed a motion for summary judgment.
Rule of Law
Holding and Reasoning (Downes, J.)
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