The Texas Supreme Court is going to hear a case in which the issue is whether the interest to be paid on past due royalties is simple or compound interest.
In the case of Samson Exploration, LLC v. Bordages, 662 S.W.3d 501 (Tex. Civ. App.—Beaumont 2022, pet. granted September 1, 2023), the lessors executed a number of oil and gas leases with Samson. The leases provide for an 18% late-charge penalty on past-due royalties to be calculated each month but do not expressly state whether the interest should be compound or simple.
The specific language in the lease is:
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