4th Circ. Royalty Ruling A Win For W.Va. Gas Producers

Law360 (January 5, 2021, 4:24 PM EST) -- On Dec. 1, 2020, the U.S. Court of Appeals for the Fourth Circuit issued its decision in Young v. Equinor USA Onshore Properties Inc., ruling for the first time on the deductibility of post-production costs in calculating gas royalties at the wellhead under West Virginia law.

The court unanimously sided with the producers, Equinor USA Onshore Properties and SWN Production Co., and held that they are entitled to deduct post-production costs in calculating royalties under the plaintiff royalty owners' oil and gas lease. In so holding, the Fourth Circuit affirms that the work-back or netback method is an appropriate method for...

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