The court further held that attempting to argue that an overriding royalty owner is a “mineral owner’s assignee” is a “tortured construction” not supported by the plain language of the Statute. 15 Unlike royalty interests and nonparticipating royalty interests, overriding royalties are not intrinsic to mineral ownership. 16 Thus, the Suspense Statute applies only to royalties and nonparticipating royalties, and not to the timely payment of leasehold interests. Although not specifically addressed by the SunBehm Gas court, “leasehold interests” ostensibly includes working or net revenue interests in addition to overrides.
previously ruled that the Suspense Statute does not apply to overriding royalty interests. Interestingly, by “courts” the District Court could only have been referring to itself, as it is the sole judicial body that has applied the restrictive “SunBehm Rule.” Citing to its own rulings in SunBehm Gas and Sandy River , the court held that only a mineral owner or a mineral owner’s assignee – which does not include overriding royalty owners – can collect interest under the Suspense Statute. Note that in M G Expl., LLC v. XTO Energy Inc. , M G Exploration argued that the legislative history of N .D. C ent . C ode § 47-16-39.1 supports applying the statute to overriding royalty interests. However, the court dismissed this argument, stating that it could not “consider extrinsic evidence, such as legislative history, unless it determines the statute is ambiguous.” 22 The District Court has, to its credit, stayed consistent in its position that the Suspense Statute is unambiguous and should be narrowly applied. 23
IV. Positive Treatment of SunBehm Gas – A Federal Line in the Sand
In the wake of SunBehm Gas , the Federal District Court has had several occasions to revisit its ruling – and has vindicated or possibly expanded its decision in each case. For example, two years later in Cont’l Res., Inc. v. Northland Royalty Corp. , the court stated in dicta that it “doubts that [the Suspense Statute] extends to untimely payments owed with respect to working interests.” 17 This is because the Statute, per the court, “on its face appears to apply only to payments of royalties.” 18 In the 2023 case of Sandy River Res., LLC v. Hess Bakken Invs. II, LLC , Sandy River Resources (like SunBehm) attempted to collect the statutory 18% interest on unpaid overriding royalties. 19 Sandy River contended that SunBehm Gas had been incorrectly decided, but the court disagreed. The court reiterated that when an oil and gas lease is executed by the mineral owner, it conveys to the operator a working interest and the right to develop the minerals. “An overriding royalty interest is carved out of the working interest [and] is not an ownership interest in the minerals themselves.” Thus, Sandy River “failed to plead a valid claim for relief under the [Suspense Statute] and an entitlement to the 18% late penalty with respect to overriding royalty interests.” 20 In 2024, yet another plaintiff sought relief under the Suspense Statute for unpaid overriding royalties. The Federal District Court in M G Expl., LLC v. XTO Energy Inc. 21 held that “courts” have
[15] Id . at 13. [16] Id .
[17] 2022 U.S. Dist. LEXIS 184471, 35 (D.N.D. August 15, 2022); see also 2024 U.S. Dist. LEXIS 118048 (D.N.D. June 5, 2024). [18] Id . [19] 2023 U.S. Dist. LEXIS 20632 (D.N.D. February 7, 2023). [20] Id. at 6-7. [21] 2024 U.S. Dist. LEXIS 197544, 12 (D.N.D. October 30, [23] See , Colton v. Lime Rock Res. GP V, L.P. , 2024 U.S. Dist. LEXIS 69370 (D.N.D. April 16, 2024) (“This Court has previously held Section 47-16-39.1 does not apply to overriding royalty interests.”); Hystad Ceynar Mins., LLC v. XTO Energy, Inc ., 2024 U.S. Dist. LEXIS 19940 (D.N.D. February 5, 2024) (“Royalties are the only payments to which N.D.C.C. 47-16-39.1 applies.). See also, Northland Royalty Corp. v. XTO Energy, Inc. , 2024 U.S. Dist. LEXIS 118048 (D.N.D. June 5, 2024) (In this case it was argued that just because the ownership of an overriding royalty interest is not an ownership in the minerals themselves does not mean the statute is inapplicable to an overriding royalty 2024). [22] Id .
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G rowth T hrough E ducat i on - A pr i l / M ay / J une 2025
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