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Liskow & Lewis Attorneys Obtain Summary Judgment Dismissing Claims for Royalties on Profits Realized from Hedging Activity

Liskow & Lewis attorneys Joe B. Norman, Cheryl M. Kornick, and Kathryn M. Zainey were retained by Cimarex Energy Company to defend the first case brought in Louisiana seeking royalties on amounts generated from a company’s hedging activity. The parties filed cross-motions for summary judgment on the issue of whether such royalties were owed under the lease between the parties and Louisiana law, and Judge Haik of the Western District of Louisiana granted judgment in Cimarex’s favor. The court affirmed long-standing principles of Louisiana law that royalty revenue represents the market price or value of the production at the well, lease, or field, and expressly declined to become the first court to hold that a lessor can claim royalties on revenue derived from any transaction that a lessee enters into simply because it is related to the oil or gas production.

Katherine McCoy
Phone: (504) 581-7979

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