Among the many other important observations of the Supreme Court are the following:
provisions chosen by the parties; - Cessation of production clauses are savings clauses intended to extend, and not restrict, a lessee’s rights during the secondary term, and may or may not eliminate or avoid the operation of the common law temporary cessation doctrine; and - Shut-in royalty clauses are savings clauses that should be given meaning and not rendered superfluous through an interpretation of a cessation of production or other lease clauses. The full opinion of the court can be accessed here. For assistance or questions concerning the above, please contact the authors or any member of the Steptoe & Johnson Energy Team
- Oil and gas leases are different from other Colorado contracts because they are both a conveyance and a contract; - In Colorado, it is the intent of the original parties to an oil and gas lease that matters, and intent should ordinarily be gleaned from the language used in the lease as well as the expressed purpose of the lease and the terms and remedies chosen by the original parties; - The nature of the primary term of an oil and gas lease differs in many respects from that of the secondary term, and the standard for determining whether sufficient production has been achieved during the secondary term may differ as well; - To avoid unduly depriving lessees of their investment, courts should exercise greater caution when assessing and determining whether an oil and gas lease has terminated during its secondary term due to a cessation of production; - Although the commercial discovery rule may aptly reflect the intentions of the parties to some oil and gas leases, it is unnecessary and unwise to universally impose its definition of production in every oil and gas lease, regardless of the context and the other
Authors
Diana S. Prulhiere
David R. Little Member | Litigation (303) 389-4370 Click Here to Email
Member | Energy (303) 389-4365
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The Suspense is Killing Me! – When Formal Notice May be Required Under North Dakota’s Suspense Statute
North Dakota
In Powell v. Statoil Oil & Gas LP , 1 the North Dakota Supreme Court found that failure to properly notify a suspended royalty owner of an alleged title defect may allow for statutory interest under North Dakota’s “Suspense Statute.” 2 This rule particularly applies when the title discrepancy is between a mineral owner and an operator, as opposed to a dispute between two competing
mineral or royalty owners. The court also held that the ten-year statute of limitations applies to unpaid, underpaid, and untimely royalty payments.
I. Background
June Slagle owned a life estate mineral interest in McKenzie County prior to her death
N at i onal A ssociation of D i v i s i on O rder A nalys t s [1] 2023 N.D. LEXIS 233; 2023 ND 235. Note that Lexis citations are used in this article. [2] N.D. Cent. Code § 47-16-39.1. Note that this Code section is sometimes generically referred to by practitioners as the North Dakota “Suspense Statute.” That portion of the Suspense Statute stating that “[t]his section does not apply . . . in the event of a dispute of title existing that would affect distribution of royalty payments, or if a mineral owner cannot be located after reasonable inquiry by the operator . . .” is sometimes referred to as the “Safe Harbor” provision. 18
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