XAE CORP. v. SMR Property Management Co.

HARGRAVE, Justice.

¶ 1 We granted certiorari to review the question whether the implied covenant to market under the oil and gas lease extends to an overriding royalty interest owner. The overriding royalty interest in this ease was an in-kind interest granted by separate conveyance rather than reserved in the assignment of oil and gas leases. Specifically, the question is whether the defendants/appellants (hereinafter “SMR”) improperly deducted from the overriding royalties paid to plaintiffs their proportionate share of the costs incurred in gathering, processing and compressing gas produced…