Boldrick v. BTA Oil Producers

BTA Oil Producers (defendant) signed a joint-operating agreement (with Chevron as operator) providing that a working-interest holder who elected non-consent status, and interests carved out of that working interest, would bear a pro rata share of costs. BTA assigned an overriding royalty interest on the land to James Boldrick (plaintiff), expressly subject to the operating agreement. Chevron drilled a producing well, and BTA elected non-consent, so BTA received no production revenue until it paid Chevron the non-consent penalty-meaning Boldrick received no override payments either. Boldrick sued for his royalties; the trial court granted BTA summary judgment, and Boldrick appealed.

Whether an overriding royalty provided for in an oil-and-gas arrangement may be subject to a non-consent penalty.