Jacklin Romeo, Susan S. Rine, and Debra Snyder Miller v. Antero Resources Corporation (Justice Walker, dissenting)
Court
West Virginia Supreme Court
Decided
June 11, 2025
Jurisdiction
S
Importance
55%
Case Summary
No. 23-589, Jacklin Romeo, Susan S. Rine, and Debra Snyder Miller v. Antero Resources Corporation FILED June 11, 2025 Walker, Justice, dissenting: released at 3:00 p.m. C. CASEY FORBES, CLERK SUPREME COURT OF APPEALS OF WEST VIRGINIA This certified question proceeding presents a new wrinkle to a perennial problem: how to calculate the lessor’s royalty payment under the terms of an oil and gas mineral lease. In the underlying case before the district court, the plaintiffs allege that Antero Resources Corporation breached their contracts by deducting post-production costs from their royalty payments; this is one of the most contentious legal issues in the oil and gas industry. “On one side of the spectrum is the established and majority ‘at the well’ approach, while on the other is the minority ‘first marketable product’ approach.”1 Today, the majority of this Court selects neither of those options and expands Wellman2/Tawney’s3 “point of sale” requirement to (1) oil and gas processed and shipped to downstream 1 William T. Silvia, Slouching Toward Babel: Oklahoma’s First Marketable Product Problem, 49 Tulsa L. Rev. 583 (Winter 2013). 2 See Syl. Pt. 4, Wellman v. Energy Res., Inc., 210 W. Va. 200, 557 S.E.2d 254 (2001) (“If an oil and gas lease provides for a royalty based on proceeds received by the lessee, unless the lease provides otherwise, the lessee must bear all costs incurred in exploring for, producing, marketing, and transporting the product to the point of sale.”). 3 See Syl. Pt. 10, Estate of Tawney v. Columbia Natural Res., 219 W. Va. 266, 633 S.E.2d 22 (2006) (“Language in an oil and gas lease that is intended to allocate between the lessor and lessee the costs of marketing the product and transporting it to the point of sale must expressly provide that the lessor shall bear some part of the costs incurred between the wellhead and the point of sale, identify with particularity the specific deductions the lessee intends to take from the lessor’s royalty (usually 1/8), and indicate the method of calculating the amount to be deducted from the royalty for such post- production costs.”). 1 locations as far away as the Gulf Coast of Louisiana, and (2) enhanced byproducts such as natural gas liquids. Because the majority’s holding expands the breadth of an already unsound rule, I respectfully dissent. Oil and gas leases are contracts.4 And under West Virginia law, contracts are to be interpreted to carry out the intent of the parties, as that intent is evidenced by the contract’s language. I would have taken this opportunity to rewrite the certified questions and overrule our holdings in Wellman/Tawney. Tawney was a mistaken decision, an outlier on the day it was decided and one that’s become lonelier with time. Its predecessor Wellman, also wrongly decided, set the stage for what has become two decades of massive judicial revision of oil and gas leases across our State. In Wellman, this Court addressed an action brought by the lessors seeking damages for failure to pay proper royalties.5 Similar to the leases at issue here, the leases in Wellman provided for natural gas royalties of “‘one-eighth (1/8) of the market value of such gas at the mouth of the well[.]’”6 When resolving the question of whether or what expenses were properly deductible, the Court acknowledged the split of authority regarding deduction of post-production costs and the rationale of those states holding that post- 4 Ascent Res. - Marcellus, LLC v. Huffman, 244 W. Va. 119, 125, 851 S.E.2d 782, 788 (2020); see also Phillip T. Glyptis, Viability of Arbitration Clauses in West Virginia Oil and Gas Leases: It Is All About the Lease!!!, 115 W. Va. L. Rev. 1005, 1007 (2013) (“[A] lease is by definition a contract. All rights and protections are controlled by the principles of contract law and depend on the proper construction.”). 5 Wellman, 210 W. Va. at 204, 557 S.E.2d at 258. 6 Id. 2 production costs are not properly deductible from the lessor’s royalty.7 The Court noted that under the implied covenant to market, the lessee embraces the responsibility to get the oil or gas in marketable condition and actually transport it to market.8 Noting simply that like other marketable product rule states, “West Virginia holds that a lessee impliedly covenants th
Case Details
Case Details
Legal case information
Status
Decided
Date Decided
June 11, 2025
Jurisdiction
S
Court Type
federal
Legal Significance
Case importance metrics
Metadata
Additional information
Quick Actions
Case management tools
Case Summary
Summary of the key points and legal principles
No. 23-589, Jacklin Romeo, Susan S. Rine, and Debra Snyder Miller v. Antero Resources Corporation FILED June 11, 2025 Walker, Justice, dissenting: released at 3:00 p.m. C. CASEY FORBES, CLERK SUPREME COURT OF APPEALS OF WEST VIRGINIA
This certified question proceeding presents a new wrinkle to a perennial
problem: how to calculate the lessor’s royalty payment under the terms of an oil and gas
mineral lease. In the underlying case before the district court, the plaintiffs allege that
Antero Resources Corporation breached their contracts by deducting post-production costs
from their royalty payments; this is one of the most contentious legal issues in the oil and
gas industry. “On one side of the spectrum is the established and majority ‘at the well’
approach, while on the other is the minority ‘first marketable product’ approach.”1 Today,
the majority of this Court selects neither of those options and expands Wellman2/Tawney’s3
“point of sale” requirement to (1) oil and gas processed and shipped to downstream
1
William T. Silvia, Slouching Toward Babel: Oklahoma’s First Marketable
Product Problem, 49 Tulsa L. Rev. 583 (Winter 2013). 2 See Syl. Pt. 4, Wellman v. Energy Res., Inc., 210 W. Va. 200, 557 S.E.2d 254 (2001) (“If an oil and gas lease provides for a royalty based on proceeds received by the lessee, unless the lease provides otherwise, the lessee must bear all costs incurred in exploring for, producing, marketing, and transporting the product to the point of sale.”). 3 See Syl. Pt. 10, Estate of Tawney v. Columbia Natural Res., 219 W. Va. 266, 633 S.E.2d 22 (2006) (“Language in an oil and gas lease that is intended to allocate between the lessor and lessee the costs of marketing the product and transporting it to the point of sale must expressly provide that the lessor shall bear some part of the costs incurred between the wellhead and the point of sale, identify with particularity the specific deductions the lessee intends to take from the lessor’s royalty (usually 1/8), and indicate the method of calculating the amount to be deducted from the royalty for such post- production costs.”).
1
locations as far away as the Gulf Coast of Louisiana, and (2) enhanced byproducts such as
natural gas liquids. Because the majority’s holding expands the breadth of an already
unsound rule, I respectfully dissent. Oil and gas leases are contracts.4 And under West
Virginia law, contracts are to be interpreted to carry out the intent of the parties, as that
intent is evidenced by the contract’s language. I would have taken this opportunity to
rewrite the certified questions and overrule our holdings in Wellman/Tawney.
Tawney was a mistaken decision, an outlier on the day it was decided and
one that’s become lonelier with time. Its predecessor Wellman, also wrongly decided, set
the stage for what has become two decades of massive judicial revision of oil and gas leases
across our State. In Wellman, this Court addressed an action brought by the lessors seeking
damages for failure to pay proper royalties.5 Similar to the leases at issue here, the leases
in Wellman provided for natural gas royalties of “‘one-eighth (1/8) of the market value of
such gas at the mouth of the well[.]’”6 When resolving the question of whether or what
expenses were properly deductible, the Court acknowledged the split of authority regarding
deduction of post-production costs and the rationale of those states holding that post-
4
Ascent Res. - Marcellus, LLC v. Huffman, 244 W. Va. 119, 125, 851 S.E.2d 782,
788 (2020); see also Phillip T. Glyptis, Viability of Arbitration Clauses in West Virginia Oil and Gas Leases: It Is All About the Lease!!!, 115 W. Va. L. Rev. 1005, 1007 (2013) (“[A] lease is by definition a contract. All rights and protections are controlled by the principles of contract law and depend on the proper construction.”). 5 Wellman, 210 W. Va. at 204, 557 S.E.2d at 258. 6 Id.
2
production costs are not properly deductible from the lessor’s royalty.7 The Court noted
that under the implied covenant to market, the lessee embraces the responsibility to get the
oil or gas in marketable condition and actually transport it to market.8 Noting simply that
like other marketable product rule states, “West Virginia holds that a lessee impliedly
covenants th
Case Information
Detailed case metadata and classifications
Court Proceedings
Document Details
Legal Classification
Similar Cases
Cases with similar legal principles and precedents
Case Details
Legal case information
Status
Decided
Date Decided
June 11, 2025
Jurisdiction
S
Court Type
federal
Legal Significance
Case importance metrics
Metadata
Additional information
Quick Actions
Case management tools