Tidelands Royalty "B" Corp. v. Gulf Oil Corporation

WISDOM, Circuit Judge:

This appeal presents a question of first impression involving oil and gas law. The question is whether, under Louisiana law, the grant of an overriding mineral royalty by a mineral lessee imposes an implied obligation on the lessee to protect the royalty owner from drainage caused by the lessee’s operations on adjacent lands. 1 We answer neither affirmatively nor negatively. Instead, we answer the question with another question: is the diminution of the royalty owners’ payments the result of a breach of the lessee's implied obligation to act in good faith with respect to…