Cabot Oil & Gas Corp. v. Followill

Summary

The Wyoming Supreme Court answered certified questions concerning the Wyoming Royalty Payment Act. It held that gathering means collecting gas and moving it to a point where it can be processed or transported to the user, making associated costs nondeductible from royalty payments. The court also held that remedies for statutory violations accrue when a royalty owner knows or has reason to know of the violations.

Holdings

1. “Gathering” means collecting gas and moving it to a point where it can be processed or transported to the user. All costs associated with that activity are costs of production under Wyo. Stat. Ann. § 30-5-304(a)(vi) and are nondeductible from royalty payments.
2. Claims for the remedies provided by the Wyoming Royalty Payment Act accrue when the royalty owner knows or has reason to know of the statutory violation.

Questions Presented

1. What does the term "gathering" mean as used in Wyo. Stat. Ann. § 30-5-304(a)(vi) in defining costs of production?
2. When do claims for the statutory penalty for failure to provide complete royalty reporting and for improper deduction of costs of production accrue: when the statutory violations occur or when the royalty owner knows or has reason to know of the violations?

Disposition

other