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XAE Corp. v. SMR Property Management Co.

Supreme Court of Oklahoma
968 P.2d 1201 (Okla. 1998)


The predecessor in interest to SMR Property Management Company (SMR) (defendant) assigned to XAE Corporation (XAE) (plaintiff) an overriding royalty interest on gas produced under an oil and gas lease. The assignment did not contain an explicit requirement for SMR to market the gas. SMR deducted, from its royalty payments to XAE, all costs of gathering, processing, and delivering the gas. XAE brought suit against SMR to recover these deductions. XAE claimed that it was entitled to royalties on the gas produced at the well, and that SMR was required to pay for making the gas marketable. The trial court granted XAE summary judgment, finding that SMR had a duty to make the gas marketable. The Supreme Court of Oklahoma granted certiorari.

Rule of Law


Holding and Reasoning (Hargrave, J.)

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