Nettye Engler Energy, LP v. Bluestone Natural Resources II, LLC (Opinion)
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The Supreme Court affirmed the judgment of the court of appeals rendering judgment that delivery of the grantor's fractional share in the pipeline occurred in the gathering pipeline rather than the transportation pipeline, holding that the court of appeals did not err.
A deed conveying the mineral estate in this case reserved a nonparticipating royalty interest in kind, meaning that the grantor retained ownership of a fractional share of all minerals in place. The deed required delivery of the grantor's fractional share "free of cost in the pipe line, if any, otherwise free of cost at the mouth of the well or mine[.]" The parties agreed that the royalty did not include production and postproduction costs incurred before delivery into the existing gas pipeline but disagreed about the pipeline's location under the terms of the deed. The trial court concluded that delivery occurred in the transportation pipeline. The court of appeals reversed, concluding that delivery occurs in the gathering pipeline. The Supreme Court affirmed, holding that the court of appeals correctly interpreted the deed in this case.
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