July 29, 2026 | By: Byron Keeling

On March 3, 2026, the Texas Supreme Court released its opinion in Fasken Oil & Ranch, Ltd. v. Puig. In recent years, the Texas Supreme Court has seemingly issued at least one royalty opinion every term. Fasken Oil is the latest in that line of royalty opinions.

The dispute in Fasken Oil arose from a mineral deed in which the Puig grantors reserved a nonparticipating royalty interest of “an undivided one-sixteenth of the oil, gas and other minerals … in, to, and under or that may be produced from [the property] … free of cost forever.”

The owner of the mineral estate, Fasken Oil, operated several oil and gas wells on the property. After producing minerals from the wells, Fasken Oil transported, treated, and processed the minerals, and then it sold all of the minerals — including the Puigs’ 1/16th share of the minerals — to a third-party purchaser at a downstream location.

Fasken Oil paid the Puigs on a net proceeds basis. More specifically, Fasken Oil calculated its royalty payments to the Puigs as follows: it paid the Puig grantors 1/16th of the downstream sales price for Fasken Oil’s production minus the Puig grantors’ 1/16th share of “the costs incurred between the wellhead and the point of sale.”

The Puigs protested that the term “free of cost” in their mineral deed meant that they were entitled to receive their royalty payments on a gross proceeds basis. They argued that they were entitled to receive 1/16th of the gross proceeds that Fasken Oil received on the sales of its mineral production from the property, not 1/16th of the net proceeds.

The Puigs’ argument required the Texas Supreme Court to navigate the contours of several of its recent royalty opinions.

The royalty clause in the Puigs’ mineral deed was an in-kind royalty clause: it expressly reserved to the Puigs 1/16th of the mineral production in-kind. Thus, for every unit of minerals that Fasken Oil produced from the mineral estate, 1/16th of that production belonged to the Puigs.

As the owners of 1/16th of Fasken Oil’s production, the Puigs had the right to take physical possession of their royalty share of the production. And if they had taken physical possession of any of the production, the Puigs could then have sold their share of the production — on their own terms — to a third-party purchaser.

Most royalty owners, especially nonparticipating royalty interest owners, have no practical ability either to take physical possession of any oil and gas production or to market their royalty share of the production. In that event, a producer may sell the royalty owner’s share of the production on the royalty owner’s behalf. Fasken Oil did so. It sold the Puigs’ 1/16th share of the production along with the remainder of its production.

Two of the supreme court’s recent royalty cases, Nettye and Myers-Woodward, suggest that if a producer sells the royalty owner’s share of the production under an in-kind royalty clause, the producer must pay the royalty owner on a net proceeds basis — i.e., it must pay the royalty owner for the royalty owner’s share of the net sales proceeds. As, indeed, Fasken Oil did.

Yet, the Texas Supreme Court in another of its royalty cases, Hyder, has previously commented that the term “cost-free” in a royalty clause “clearly frees the … royalty” of the burden of any “postproduction costs” and therefore contemplates that the royalty owner will receive payment on a gross proceeds basis.

Not surprisingly, the Puigs relied heavily on Hyder to argue that they were entitled to 1/16th of the gross proceeds from Fasken Oil’s downstream sales. The supreme court in Fasken Oil, however, concluded that Fasken Oil properly paid the Puigs on a net proceeds basis rather than a gross proceeds basis. Distinguishing Hyder, the supreme court ruled that under the terms of the Puigs’ mineral deed, the term “free of costs” meant only that the Puigs’ royalty interest was free of production costs:

We hold that the “free of cost forever” language refers to raw minerals produced at the wellhead, not to processed minerals sold downstream. Thus, it does not preclude deduction of postproduction costs from a downstream sales price to arrive at the market value of raw minerals produced at the wellhead.

Fasken Oil may have the effect — intended or unintended — of limiting the “cost-free” discussion in Hyder to its specific facts.

Even so, the result in Fasken Oil is reasonable and fair. If an in-kind royalty owner takes physical possession of its royalty share of the production, it must itself bear the post-production costs necessary to prepare the production for sale in a downstream market. The same should be no less true when the producer markets and sells the royalty owner’s share of the production: the royalty owner should bear its proportional share of the post-production costs necessary to prepare the production for sale.

At the same time, Fasken Oil reinforces what the Texas Supreme Court has frequently recognized in its royalty opinions: the specific terms of the parties’ agreements will control the outcome in any royalty litigation, and the parties are free to agree on terms that may deviate from the general rule or practice.

Especially after Fasken Oil, prudent producers may want to enter into separate purchase agreements with any in-kind royalty owners. Under such agreements, producers could purchase an in-kind royalty owner’s share of the production at the wellhead, specifying that the price they will pay for the royalty owner’s share of the production will be the net proceeds that they receive for that share of the production on selling it — i.e., the price that the purchasers receive for the royalty owner’s share of the production minus the royalty owner’s share of the purchasers’ post-production costs.

The advantage of such separate purchase agreements is that they could more plainly spell out the parties’ respective rights. One of the key lessons in Fasken Oil, as in all of the Texas Supreme Court’s royalty opinions, is that producers and royalty owners should strive to ensure that their royalty agreements plainly say exactly what they intend for them to mean.

This Alert was prepared by Byron Keeling, a member of GableGotwals’ Energy, Oil & Gas Team in the Firm’s Houston office. For questions about this decision or related oil and gas matters, please contact Byron or another member of the team.

Byron Keeling

This article is provided for educational and informational purposes only and does not contain legal advice or create an attorney-client relationship. The information provided should not be taken as an indication of future legal results; any information provided should not be acted upon without consulting legal counsel.

July 20, 2026 | GableGotwals is pleased to announce that Travis Lee has joined the Firm’s Tulsa office as an Associate.

Travis has nearly 20 years of industry experience advising companies on complex air and water quality permitting and compliance matters, environmental due diligence, NEPA assessments, OSHA compliance, regulatory inspections, and evolving federal and state environmental requirements.

Prior to joining the Firm, Travis served in senior environmental and regulatory roles with prominent energy companies and environmental consulting firms. His experience includes developing and implementing environmental permitting and compliance programs for upstream, midstream, and energy infrastructure operations across multiple states, advising clients during regulatory inspections and acquisition due diligence efforts, leading environmental, health, and safety audits, and preparing and delivering environmental and regulatory compliance training.

“We are thrilled to welcome Travis to the Firm,” said Tim Sowecke, Co-Chair of GableGotwals’ Environmental and Natural Resources Practice Group. “Travis’ experience advising companies on complex environmental permitting, compliance, and regulatory matters makes him an excellent fit for our Environmental and Natural Resources Law Practice. We are excited to welcome him to our team and look forward to the value he will bring to our clients.”

About GableGotwals
GableGotwals® is a full-service law firm with more than 100 attorneys and 70 other business professionals in Oklahoma and Texas. We represent a diversified client base across the nation, and our connections and reach are global. Fortune 500 corporations, privately owned companies, entrepreneurs, foundations, and individuals entrust us every day with the stewardship and strategic management of their legal challenges.

GableGotwals advised Integrated Utility Services (IUS) in its acquisition of Paragon Industries, a long-standing Oklahoma-based manufacturer of high‑quality steel pipe products, through a Chapter 11 restructuring process, preserving a strategic domestic steel pipe manufacturing platform and positioning the company for long-term growth.

July 16, 2026 | GableGotwals recently advised Integrated Utility Services (IUS) in its acquisition of Paragon Industries, a long-standing Oklahoma-based manufacturer of high‑quality steel pipe products.

The Houston-based IUS – owned and led by Tulsa natives Trinity Dawson, Co-founder, President & CEO, and Dustin Ketchum, Co-founder & Executive Vice President – acquired substantially all of the assets of Paragon Industries through a Chapter 11 restructuring process, preserving a strategic domestic steel pipe manufacturing platform and positioning the company for long-term growth.

The transaction provides the capital, operational expertise, and industry relationships necessary to restart operations, retain and create jobs, and re-establish Paragon as a leading supplier of high-quality steel pipe products to energy, utility, infrastructure, and industrial customers throughout North America.

The transactional team was led by Shareholders Nathan H. Atkins, Stephen W. Lake, Jeffrey D. Hassell,  Sidney K. Swinson, and James M. Scears, who provided tax support, with assistance from associate, Francesca A. Walentynowicz. 

Click here to view the official press release.

About GableGotwals

GableGotwals® is a full-service law firm with more than 100 attorneys and 70 other business professionals in Oklahoma and Texas. We represent a diversified client base across the nation, and our connections and reach are global. Fortune 500 corporations, privately owned companies, entrepreneurs, foundations, and individuals entrust us every day with the stewardship and strategic management of their legal challenges.

Ranked Band 1 in Corporate/Commercial and Energy & Natural Resources by Chambers USA, 2026, with clients stating “GableGotwals is a full-service firm which provides excellent communication and a strong team.”

July 15, 2026 | By: Tim Sowecke and Tyler A. Self

The Department of Justice has renamed its Environment and Natural Resources Division (ENRD) the Energy and Natural Resources Division. Same acronym. Different signal. DOJ announced the change on June 29, 2026, after Principal Deputy Assistant Attorney General Adam Gustafson previewed the move in a Wall Street Journal op-ed titled “New Name, New Mission at the Justice Department.” DOJ framed the change around a blunt proposition: “Energy security is national security.”

The rename is not just a branding exercise. It aligns DOJ’s environmental and natural resources litigation shop with the Administration’s broader energy program: domestic production, grid reliability, critical minerals, expedited permitting, defense of federal energy actions, and affirmative challenges to state policies DOJ views as anti-energy or federally preempted. Executive Order 14154, “Unleashing American Energy,” directs agencies to identify and address actions that burden domestic energy development and instructs the Attorney General to consider litigation positions tied to those policy changes.

Why the Name Change Matters

ENRD has always handled more than traditional environmental enforcement. It defends federal permitting decisions, public lands decisions, energy infrastructure approvals, tribal and natural resource matters, and agency action across the federal environmental docket. DOJ’s announcement places that work squarely within the Administration’s broader energy-security agenda.

That is the point for regulated industry. DOJ is signaling that infrastructure, production, and reliability are not peripheral to environmental litigation—they are central to it. In practical terms, that means DOJ will be staffed and directed toward lawyers who understand the operational side of regulated facilities: pipelines, power generation, production, transmission, refining, waste management, permitting timelines, and the constant work of fitting square operations into the round hole of layered federal and state regulation.

But that does not mean environmental enforcement disappears. DOJ expressly stated that ENRD’s environmental enforcement work will continue. The better read is narrower and more useful: facilities should expect an enforcement philosophy that gives more weight to compliance, correction, operational reality, and energy reliability, while still reserving penalties and criminal enforcement for serious, repeated, and fraudulent conduct.

Compliance First Overlay

The DOJ rebrand also fits with EPA’s recent “compliance first” orientation vis-à-vis its “Reinforcing a ‘Compliance First’ Orientation for Compliance Assurance and Civil Enforcement Activities.” For industry, “compliance first” should not be read as “enforcement last.” EPA and DOJ are signaling a preference for correcting violations efficiently, achieving timely compliance, and resolving matters without unnecessary punitive drag where the facility is acting in good faith. Companies still need to monitor, maintain, and update their permits, monitoring, reporting, corrective action records, and audit results—while communicating all of this to regulators in a disciplined, documented manner.

But these two actions, among others, signal a tone shift within the agencies. A compliance first program should favor getting facilities into compliance and keeping them operating lawfully, rather than allowing disputes to become endless penalty exercises detached from environmental outcome—and reality. The best regulated entities will use that shift by moving quickly when issues arise.

National Security Is Now Part of the Environmental Docket

The most important legal signal is the national-security framing. The Administration’s grid reliability order states that rising electricity demand from AI data centers and domestic manufacturing strains the grid and that reliability affects national and economic security.

That framing changes the litigation posture around energy facilities. Environmental permitting disputes, infrastructure challenges, and related disputes may increasingly be argued not only as environmental or administrative law questions, but also as reliability, defense, supply-chain, and economic security questions.

The same point is reinforced by global oil-market pressure tied to Iran and the continuing strategic importance of the Strait of Hormuz. Those external risks sharpen the domestic argument: energy infrastructure, reliability, and production are no longer being treated as ordinary regulatory subjects. They are being framed as national-security assets.

What Regulated Companies Should Take From This

The immediate takeaway is not that compliance risk has gone away. It has not. The takeaway is that the federal enforcement and litigation environment is becoming more operationally literate and more tied to energy security.

Companies should be prepared to show that they are operating responsibly, correcting problems quickly, and maintaining reliable service while complying with permits and environmental laws. That means compliance programs should be current, field-tested, and documented. It also means regulatory communications should be practical, technical, and tied to corrective action.

The new ENRD will likely be more receptive to arguments that lawful operations, energy reliability, and compliance solutions can coexist. But those arguments work only when the facility has the facts to support them.

The best posture is therefore simple: operate, document, correct, and communicate. The federal government may be moving away from enforcement for enforcement’s sake, but it is not moving away from compliance. It is reframing compliance as part of the work required to keep energy and industrial infrastructure moving.

For assistance with regulatory compliance, permitting, enforcement, and related matters, please contact Tim Sowecke or Tyler A. Self. GableGotwals’ Administrative & Regulatory, Energy, Oil and Gas, and Environmental and Natural Resources teams regularly advise clients on environmental, regulatory, and energy matters.

Tim Sowecke
405-568-3308
tsowecke@gablelaw.com

Tyler A. Self
405-235-5589
tself@gablelaw.com

This article is provided for educational and informational purposes only and does not contain legal advice or create an attorney-client relationship. The information provided should not be taken as an indication of future legal results; any information provided should not be acted upon without consulting legal counsel.

June 29, 2026 | GableGotwals is pleased to announce the return of Motahareh H. Nickel to the Firm’s Oklahoma City office, where she will serve as Of Counsel.

Motahareh’s practice focuses on general corporate transactions, mergers and acquisitions, corporate finance, commercial agreements, real estate, and regulatory matters, with experience across a broad range of industries, including energy and aviation.

Prior to rejoining the Firm, Motahareh served as Corporate Counsel for a large company headquartered in Oklahoma City with operations throughout the United States, where she advised a diverse portfolio of business units and supported corporate development initiatives, including acquisitions, divestitures, and strategic partnerships. She also supported operations, fleet, and finance functions through the negotiation of commercial agreements and the delivery of strategic day-to-day business counsel.

“We are thrilled to welcome Motahareh back to GableGotwals,” said Amy Stipe, Managing Shareholder of GableGotwals’ Oklahoma City office. “Her in-house experience, transactional background, and familiarity with the Firm make her a valuable addition to our team and an asset to our clients as we continue to grow in Oklahoma City and across the Firm.”

Prior to her in-house role, Motahareh’s experience at GableGotwals included advising clients on mergers and acquisitions, syndicated lending transactions, and the acquisition, sale, financing, and operation of energy, gaming, and other business assets. She also participated in protest hearings before the Oklahoma Corporation Commission.

About GableGotwals
GableGotwals® is a full-service law firm with more than 100 attorneys and 70 other business professionals in Oklahoma and Texas. We represent a diversified client base across the nation, and our connections and reach are global. Fortune 500 corporations, privately owned companies, entrepreneurs, foundations, and individuals entrust us every day with the stewardship and strategic management of their legal challenges.

GableGotwals represented Alliance Resource Partners, L.P. in its acquisition of AllDale Minerals III, LP and AllDale Minerals IV, LP, an oil and gas mineral and royalty acquisition company that holds vast acreage across the Permian, Anadarko, Bakken, and Haynesville basins, for approximately $206.2 million.

GableGotwals represented OGE Energy Corp. (“OGE Energy”) and its subsidiary, Oklahoma Gas and Electric Company (“OG&E”) in two credit facilities due June 12, 2031, with a combined $1.3 billion value.