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Click here for the full text of this decision FACTS:On Sept. 20, 1922, Holman Cartwright and Claire L. Cartwright (appellants’ predecessors) executed an oil and gas lease to Houston Oil Co. of Texas. Cologne Production Co. acquired the lease on Jan. 1, 1968, and since then has operated the wells on the leased premises. The Cartwrights and Cologne executed a gas division order, dated Jan. 1, 1968. HOLDING:Affirmed in part; reversed and remanded in part. The appellants contend the trial court erred by failing to apply relevant rules of law applicable to the interpretation of the intent of the parties to an unambiguous written contract. Appellants assert that the “net proceeds” language in the 1968 gas division order does not authorize deductions for post-production costs, other than state taxes, in computing appellants’ gas royalties. Appellees argue that “net proceeds” means gross proceeds minus post-production marketing costs. The royalty provision language in the instant case is similar to that of the division order in Judice v. Mewbourne Oil Co., 939 S.W.2d 133 (Tex. 1996). In Judice, the division order provided, “Settlement for gas sold shall be based on the net proceeds realized at the well by you.” Holding that the trial court erred in concluding that the lessee was prohibited from deducting post-production compression costs from the proceeds received for the sale of gas, the supreme court explained that such language “unambiguously provides that royalty is based on net proceeds at the well.”Net proceeds’ expressly contemplates deductions, and we note once again that”at the well’ means before value is added by preparing the gas for market.” Appellants contend that the law in force at the time of the execution of a contract governs its construction. Appellants rely on Pan Am. Petroleum Corp. v. Southland Royalty Co., 396 S.W.2d 519 (Tex. Civ. App.-El Paso 1965, writ dism’d), for the definition of “net proceeds.” The lease in Pan American contained the following royalty provision: “To deliver to the credit of lessor, free of cost, in the pipe line to which they may connect their wells, the equal one-eighth part of all oil produced and saved from the leased premises and 1/8 of the net proceeds of potash and other minerals in the mine.” In construing this royalty provision, the El Paso Court of Appeals held that there were no costs to be deducted from the proceeds of the sale of the gas. The court finds this case to be “distinguishable and unreliable.” Appellants further argue that “net proceeds received” means proceeds derived from the sale of all natural gas, less only production and severance required to be paid. In support of this contention, appellants point to a provision in the gas division order which provides: “You are authorized to deduct and pay to the proper taxing authorities all production and severance taxes required to be paid with respect to the interest of the undersigned in the gas produced from the above described land.” Appellants argue that Cologne drafted the division order providing itself authority to deduct taxes, and if it sought the right to deduct other costs, such costs would have been included in the division order. The language authorizing Cologne to deduct and pay the taxes merely shifted the burden of paying the taxes to Cologne. The court concludes that the gas division order did not modify the general rule that post-production costs are proportionately borne by both the operator and the royalty interest owners. Because appellees were entitled to deduct compression and treatment costs in computing gas royalties owed to appellants, the court holds the trial court did not err in granting appellees’ motion for summary judgment on this ground. Appellants’ first issue is overruled. Appellants brought suit in Live Oak County based upon the mandatory provision of �15.011 of the civil practice and remedies code, alleging that they are royalty owners under an oil and gas lease which covers land located in Live Oak County, and appellees have unlawfully deducted certain expenses in calculating their royalty payments. They argue that such an action constitutes one for recovery of damages to real property. The nature of the suit is about the calculation and computation of royalty payments under a contract, not a dispute regarding ownership of appellants’ royalty interests, so �15.011 does not apply. OPINION:Hinojosa, J.; Hinojosa, Yanez and Castillo, JJ.

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