The parties in this contract dispute question whether overriding royalties are payable out of the initial oil and gas production from a tract of land on the outer continental shelf adjacent to Louisiana. The "calculate and pay" clauses reasonably may be interpreted to mean that the overriding royalty payments shall be calculated and paid by using the same methods prescribed for the measurement and computation of the landowner's royalty under the terms and conditions of the lease, which is specifically subject to the federal regulations' provisions for measuring, calculating and accounting for production, instead of meaning that the payment of overriding royalties shall be suspended if the landowner's royalty were to be suspended under the Outer Continental Shelf Deep Water Royalty Relief Act. The district court's judgment is reversed and remanded. 5th U.S. Circuit Court of Appeals, No. 11-30038, 03-12-2013.
Total E&P USA Inc. v. Statoil Gulf of Mexico L.L.C.
March 20, 2013