XAE Corp. v. SMR Property Management Co.

Supreme Court of Oklahoma

968 P.2d 1201 (Okla. 1998)

The implied duty to market in oil and gas leases does not exist toward overriding royalty interest owners.

Relevant Facts

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

Issue

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Holding & Reasoning

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Concurrence

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Dissent

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Last updated:

December 2, 2020

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Procedural History

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Citations

968 P.2d 1201 (Okla. 1998)