Puckett v. First City National Bank of Midland
Texas Court of Appeals
702 S.W.2d 232 (Tex. App. 1985)
The Pucketts' (defendants) lease, later acquired by First City National Bank (defendant), provided that if pooled, they'd receive royalties proportional to their acreage share of the pooled unit, but excepted "payment of royalties on production from the pooled unit" from the general pooling-as-if-part-of-the-lease rule; the Bank pooled with Gulf Oil's (plaintiff) leasehold, each sold their respective portions of gas to different purchasers at different prices, and the Bank calculated the Pucketts' royalties using the Bank's own gas-sales price. After a dispute among Gulf, the Bank, and a gas purchaser over which gas belonged to whom, the Pucketts countersued seeking royalties based on a weighted average of all unit sales rather than just the Bank's price, and the trial court sided with the Bank's allocation method.
Whether, in a voluntarily pooled unit with multiple working-interest owners selling minerals to different purchasers, a royalty owner is paid based on his own lessee's sale price for the minerals allocated to his tract.