The deduction of “post-production expenses” from a mineral owner’s payment can lead to the mineral owner owing the operator money. This has been a hot topic for both oil and gas companies and mineral owners alike. The issue is coming before courts throughout the country.
Last November, the West Virginia Supreme Court of Appeals decided 3-2 that companies cannot deduct post-production expenses from mineral royalty payments. However, after Justice Beth Walker’s recent election to that court, it has decided to re-hear the case. Given that former Justice Brent Benjamin voted with the majority against permitting the deduction of post-production expenses, some are concerned that his absence may mean that the court will issue a new ruling in favor of the practice.