XAE Corp. v. SMR Property Management Co.

SMR's predecessor assigned XAE (plaintiff) an overriding royalty interest in gas produced under a lease, without expressly requiring the marketing of gas. SMR (defendant) deducted gathering, processing, and delivery costs from XAE's royalty payments; XAE sued, arguing it was entitled to royalties on gas produced at the well without those deductions, based on an implied duty to market.

Whether the implied duty to market in oil and gas leases exists toward an overriding royalty interest owner.