Fawcett v. Oil Producers, Inc. of Kansas

The opinion of the court was delivered by

Biles, J.:

This is a class action for underpayment of royalties claimed under 25 oil and gas leases entered into between 1944 and 1991. The controversy arises because the lessee-operator sells its raw natural gas at the wellhead to third parties, who in turn process the gas before it enters the interstate pipeline system. The price tire operator is paid—and upon which royalties have been calculated—-is based on a formula that starts with the price those third parties receive for the processed gas (or a published index price) then deducts certain costs…