Newfield Exploration Company, et al. v. State, et al.

Docket No. 20190088
Oral Argument: Thursday, June 20, 2019 10:45 AM

Docket Info

Title
Newfield Exploration Company, Newfield
Production Company, and Newfield RMI LLC, Plaintiffs and Appellees
v.
State of North Dakota, ex rel. the North
Dakota Board of University and School Lands,
and the Office of the Commissioner of University
and School Lands, a/k/a the North Dakota
Department of Trust Lands, Defendants and Appellants
Case Type
CIVIL APPEAL : OIL, GAS AND MINERALS
Appeal From
Case No. 2018-CV-00143
Northwest Judicial District, McKenzie County
Robin Ann Schmidt

Parties' Statement of Issues

  • Appellant

    [¶1] Whether the District Court erred in its interpretation of the terms of the Newfield Leases as defined in Newfield’s Complaint.
    [¶2] Whether the District Court erred in its interpretation of the phrase “gross proceeds of sale” as stated in the gas royalty provision contained in the Newfield Leases.
    [¶3] Whether the District Court erred in declaring the Board of University and School Lands (the “Board”) and Department of Trust Lands the ("Department”) (the Board and the Department hereinafter collectively referred to as the “State”) are not entitled to any additional gas royalty payments from Newfield for gas on which royalty payments have already been made, in addition to any applicable interest and penalties that have accrued as a result of Newfield’s failure to pay such royalty payments, whether or not such royalty payments were reviewed during the audit conducted by the State as alleged in Newfield’s Complaint.
    [¶4] Whether the District Court erred in dismissing the State’s request for a judgment ordering that Newfield grant the State an accounting for the production and revenues derived from the Newfield Wells, as defined in the State’s Answer and Counterclaims, in order to determine the gas royalties, interest and penalties owed to the State with respect to the Newfield Wells.


Summary

Newfield Exploration Co. (“Newfield) operates numerous gas-producing wells throughout North Dakota. Newfield has entered into leases with the State where gas royalties are paid based upon “gross production or the market value thereof, at the option of the lessor, such value to be based on gross proceeds of sale . . . .” The State initiated an audit of Newfield in June 2016. The State’s audit revealed information the State believed indicated Newfield was improperly paying gas royalties under the terms of the lease. Specifically, the State asserted Newfield was paying royalties based on “gross proceeds less deductions,” which the lease does not allow for. Newfield responded and asserted it paid royalties based on the gross proceeds received from Oneok Rockies Midstream L.L.C. (“Oneok”) under gas purchase agreements. The gas purchase agreements indicate Newfield is paid 70-80% of the proceeds received by Oneok for the sale of gas purchased from Newfield.
Newfield initiated litigation requesting a judgment declaring the royalty payments at issue were properly calculated based on the gross amount paid to Newfield by Oneok. Both parties moved for summary judgment. The district court held the terms of the lease dictated the State be paid based upon the gross amount Newfield receives from Oneok. On appeal, the State argues the court erred in interpreting the lease and effectively requires the State to share in post-production costs.


Briefs

Filing Date Description
04/29/2019 APPELLANT BRIEF View
06/07/2019 APPELLEE BRIEF View

Counsel

Party Type Name
APPELLANT ATT. GENERAL OFFICE David Paul Garner - 06860
APPELLEE PRIVATE PRACTICE Lawrence Bender - 03908
APPELLEE PRIVATE PRACTICE Spencer Douglas Ptacek - 08295

(Note: Attachments may not be available for recently filed cases and/or confidential documents.)

Seq. # Filing Date Description Attachment
1 03/19/2019 NOTICE OF APPEAL : 03/19/2019
2 03/26/2019 NOT. OF FILING NOT. OF APPEAL AND PROOF OF SERV.
3 03/26/2019 Notice served on David P. Garner, Lawrence Bender and Spencer D. Ptacek
4 03/26/2019 Rec'd $125.00 filing fee
5 04/22/2019 ELEC. RECORD ON APPEAL DATED APRIL 18, 2019 (ENTRY NOS 1-73)
6 04/29/2019 APPELLANT BRIEF View
7 04/29/2019 APPELLANT APPENDIX
8 04/29/2019 Oral Argument Request by Appellants
9 05/06/2019 Rec'd 6 copies of ATB & ATA from CSD
10 05/22/2019 NOTICE OF ORAL ARGUMENT SENT
11 05/22/2019 MOT. EXT/TIME APPELLEE BRIEF
12 05/23/2019 ACTION BY ACTING CHIEF JUSTICE - Granted : 06/07/2019
13 05/23/2019 MOTION FOR Reconsideration of Extension
14 05/24/2019 ACTION BY ACTING CHIEF JUSTICE (Reply brief due 9 a.m., June 18) - Denied
15 05/24/2019 MOT. EXT/TIME REPLY BRIEF (sua sponte)
16 05/24/2019 ACTION BY ACTING CHIEF JUSTICE (9 a.m.) - Granted : 06/18/2019
17 06/07/2019 APPELLEE BRIEF View
18 06/07/2019 APPELLEE APPENDIX
19 06/10/2019 Rec'd 6 copies of AEB & AEA from CSD