Chesapeake Exploration, L.L.C. v. Hyder

I withdraw my June 12, 2015 dissenting opinion and substitute the following in its place.

I disagree with the Court that the overriding royalty clause expresses an intent to modify the default rule that such an interest bears post-production costs. I would reverse the court of appeals and hold that Chesapeake’s deduction of post-production costs was proper. I respectfully dissent.

The disputed clause gives the Hyders a “cost-free (except only its portion of production taxes) overriding royalty of five percent (5.0%) of gross production obtained from each [directionally drilled] well.” This…