pjc-oil-and-gas-2022-lib

PJC 303.8

L ESSOR -L ESSEE I SSUES

available, the market value at the well can be determined by subtracting reasonable postproduction costs from the market value at the point of sale (the netback method). Heritage Resources, Inc. , 939 S.W.2d at 122. Postproduction costs include transport ing the gas to the market and processing the gas to make it marketable. Heritage Resources, Inc. , 939 S.W.2d at 122. In such circumstances, the question will have to be modified to fit the facts of the case. If there is a fact dispute about whether there are comparable sales at the well, the dispute should be resolved by submission to the jury. Market value is also defined in the Texas division order statute and in the Texas Tax Code. Tex. Nat. Res. Code § 91.402(i); Tex. Tax Code § 201.101. Modification depending on lease terms. If the lease provision requires valuation at some place other than at the well (e.g., at the point of sale or point of transfer to a nonaffiliated third party) or if it provides for a different method of valuation (e.g., highest index price), the question and instruction should be altered to be consistent with the lease terms.

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