Limitations of Action: Discovery Rule; Fraudulent Concealment Doctrine Royalty and Royalty Interests: Calculation Methodology

摘要

Ross alleges he is the owner of a l/3rd of l/8th royalty interest created by an August 1961 lease requiring the royalty to be paid on the amount realized from the sale of the natural gas. The General Land Office (GLO) is another royalty owner paid by Shell by virtue of this 1961 lease. The lease is pooled in 1970 and production is allocated between Shell and the other pooled lessee on a surface acreage basis. In determining the royalty owed, Shell did not use the price it realized from the sale of its share of the pooled unit production but instead used a weighted average price that included the sales price of the other lessee within the pooled unit. Shell stipulates that from January 1988 through February 1997, it underpaid the plaintiff by some $60,000 by using the weighted average price methodology. Shell also admits that it used an internal transfer price, rather than the price it actually received as to certain non-pooled wells.