Oil and gas royalty retrial starts up

By David Yates | Feb 7, 2011

In June 2009, the Southeast Texas Record reported on an oil and gas lease trial, which ended in mistrial after jurors failed to reach a verdict.

On Monday, Feb. 7, jury selection began in the second showdown between M&M Resources and DSTJ Corp., who is also a counter-plaintiff in the lawsuit.

The first trial began May 25, 2009, and ended June 11, 2009.

Court records show that in 2006 M&M and Energy Land Resources sued DSTJ, claiming DSTJ owed seven months of royalties on an area well shut down by the Texas Railroad Commission.

On Sept. 22, 2002, M&M assigned 21 leases to DSTJ for a .5 percent royalty fee. Four of the 21 leases were known as the Blackman Tract, a region of land owned by multiple Jefferson County residents.

According to the lawsuit, once the agreement was in place, DSTJ proceeded to drill the Quail No. 1 well on the Blackman Tract, which was functional from October 2003 until March 2004, when the Texas Railroad Commission sealed it.

"Despite the production obtained from the Quail No. 1, DSTJ has never made any royalty payments to plaintiff," the suit states. "DSTJ's failure to make royalty payments ... constitutes a default of DSTJ's obligations under the assignment."

Court record show DSTJ filed a countersuit alleging M&M and ELR were engaged in shady dealings and had snuck "improper lease provisions" into their agreement that prevented DSTJ from pooling the tracts.

The company claims it had to shut down the well due to M&M's and ELR's alleged fraud and negligence.

Once again, a Jefferson County jury must decide if it was M&M's fault that DSTJ's well was shut down, or if DSTJ owed M&M for seven months of royalties for the time the well was up and running.

M&M is represented in part by attorney Terry Wood of the Crutchfield, De Cordova & Wood law firm in Beaumont.

DSTJ is represented in part by the Law Offices of Keith Kebodeaux in Beaumont.

Judge Gary Sanderson, 6oth District Court, is presiding over the trial.

Case No. A172-979

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