State v. Pennzoil Co.

THOMAS, Justice.

The single issue to be resolved in this case is whether the State of Wyoming (State), the lessor of an oil and gas lease entered into through the Board of Land Commissioners (Board), is entitled to royalty on payments made by a purchaser from the lessee who was required to make minimum payments for gas even though the gas was not received. The district court held that royalties were not due on these payments which were attributable to what is described in the industry as a “take-or-pay” clause. We are in accord that royalties are not due on such payments, and we affirm the…