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Royalty Fraud in the Texas Oil and Gas Drilling Industry

Jurors will be deliberating soon on whether fraud was committed in a oil and gas royalty lawsuit near Houston, Texas. The lawsuit was filed by M&M and E.L.Resources against D.S.T.J. Corporation with a claim of not receiving seven months of royalties on a well that was later closed down. Twenty-one leases stated that D.S.T.J. were to pay a 5% royalty to the plaintiffs in which 4 were located in an area owned by residents of Blackman Tract in Jefferson County. Court papers state that D.S.T.J. was drilling at the well which was functioning from Oct. third until it was shut down in March.

The plaintiffs claim that D.S.T.J. didn't pay any royalties during the operations of the wells at that time. It's stated in the lawsuit that the non-payment constitutes an obligational default of the contract.

D.S.T.J. responded with a counter suit alleging that the plaintiffs lease provisions were improper, and the plaintiffs were involved in shady dealings in the agreement which was effective in preventing them from further production of the tract. So D.S.T.J. had to close production of the wells due to the plaintiffs including fraudulent provisions in the lease.

The jury will decide if the plaintiffs fraud was the reason the well was closed or will D.S.T.J. pay royalties for the production time for the seven months the well was in operation.

Royalties can be denied in a few ways. Oil and gas producers reporting lower levels than they produce in order to circumvent paying the royalties. Inflating production expenses is another way they scheme to avoid paying royalties. Texas landowners will lease several acres and don't have many options when royalties are denied to them that they should rightfully be receiving. There is no one authority in Texas for ensuring the landowner that they will receive their royalties. And because of that, landowners have no recourse when drilling companies fail to pay royalties. So the only option is to file a lawsuit through a Houston Oil and Gas Lawyer or a Houston Fraud Lawyer to recover the royalties that are rightfully theirs.