LAKE CHARLES — Anglo-Dutch Energy LLC is requesting a Louisiana appeal court rehear a case that required the independent oil and gas company to pay royalties on the energy it produced from a leased well.
Louisiana's 3rd Circuit Court of Appeal ruled “the relationship between Anglo-Dutch and Plaintiffs prior to Oct. 30, 2012, is governed by the bargained for lease between the two parties. Anglo-Dutch’s obligation to pay plaintiffs a one-fifth royalty on all production from the well is modified only upon the Commissioner’s unitization order’s effective date, Oct. 30, 2012,” according to the ruling.
“An application for rehearing was filed with the 3rd Circuit,” Samuel E. Masur, one of the attorneys from the Lafayette-based firm Gordon Arata representing Anglo-Dutch Energy, told the Louisiana Record.
Masur would not respond directly to the appeal court’s decision or the rehearing.
“That application is currently pending,” he said.
The court reversed a decision by a trial court that claimed that Anglo-Dutch was only required to pay plaintiffs — Frank Hayes Gladney and Margaret Stella Gladney Guidroz — unit-based royalties because it had obtained the conditional allowable, according to court records.
The 3rd Circuit reasoned that the conditional allowable did not invalidate the contractual terms of the mineral lease between the parties, according to the appellate court’s ruling. Therefore, the appellate court found that Gladney and Guidroz were entitled to their full one-fifth lease-based royalty, which dates from the first production date until the unit’s effective date.
The trial court stated its reasoning for its ruling was that Gladney and Guidroz did not show any provision in the lease contract that stated it would require them to be compensated more than is allowed by “the commissioner under the allowable and the unitization agreement,” according to court documents. The 3rd Circuit rejected this, stating the mineral lease between the parties clearly stated that Gladney and Guidroz were to receive lease-basis royalties on all production from the well and that the lease governed the parties’ relationship prior to the unitization order, which the commissioner made effective on Oct. 30, 2012.
Additionally, the court rejected Anglo-Dutch Energy’s argument that the plaintiffs’ claims were a “collateral attack” on the commissioner’s authority. Instead, the 3rd Circuit found that Gladney and Guidroz were seeking to enforce their rights under the mineral lease, not attacking the commissioner’s conditional allowable, according to court records.
The 3rd Circuit also debunked the oil and gas company’s claims that it had to pay royalties on a unit basis otherwise the payment of the full one-fifth lease-basis royalty would have resulted in double royalties, according to court documents. The court added that Anglo-Dutch Energy had the option to modify the terms of the lease through a royalty escrow agreement. This was a suggestion that the plaintiffs made to Anglo-Dutch Energy.
In addition to finding the trial court’s finding erroneous, the 3rd Circuit assessed “all costs below and on appeal” against Anglo-Dutch Energy.
“We don’t generally comment on pending litigation,” Masur said regarding additional comment on the case.
Attorneys representing the plaintiffs did not respond to requests for comments.