Royalty and Royalty Interests: Remedies For Nonpayment

摘要

The case arises from leases that began producing sour natural gas from Mobile Bay in October 1993. The leases are drafted by the chief legal counsel of Alabama's Department of Conservation and Natural Resources. Instead of an "at the wellhead" approach to royalty calculation, the royalty provisions employ a "gross proceeds" valuation methodology. Audits conducted for the State in 1995 and 1996 lead to assertions by the State that the lessee had underpaid its royalty by over $50 million dollars.