The Fifth Circuit Court of Appeals decided an interesting case involving recoupment of overpaid oil and gas royalties. In DDR Weinert, Ltd. v. Ovintiv USA, Inc., No. 23-50479, 2025 WL 636315 (5th Cir. Feb. 27, 2025), a family named Richter owned four tracts in Karnes County, Texas. They sold those tracts to DDR.
Ovintiv (formerly Encana), the operator of the wells on the property, discovered that the Richters had been overpaid approximately $608,000.00 in royalties since 2016. Ovintiv notified DDR that it would be recouping the overpayment through deductions to DDR’s royalties, even though the overpayment was made to the prior mineral owner. Naturally, DDR filed suit.
Equitable recoupment is a commonly accepted remedy in the oil and gas industry. The Court stated that the criteria for equitable recoupment are: (1) an overpayment was made, and
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