In this case contesting the royalty value of minerals recovered by carbon-dioxide-injection, the principal issues are (1) whether the gas should be valued in its "native" state, before extraction, or at the wellhead commingled with CO2; (2) whether removing, compressing and transporting CO2 should be classified as production operations; and (3) whether CO2 removed at an off-site processing plant for reuse is a production or post-production operation. French and other royalty owners sued Occidental, the field producer, for paying royalties on 70 percent of gas production, not 100 percent they allege they're owed under their leases. The trial court found for the royalty owners. But the court of appeals reversed and rendered judgment for Occidental, holding that production and post-production processing occurred at the CO2-extraction plant and the royalty owners' failure to apportion these costs made their evidence legally insufficient to prove Occidental underpaid royalties due.
