HighMount Exploration & Production LLC, and Dominion Oklahoma Texas Exploration & Production, Inc. v. Harrison Interests, LTD., Dan J. Harrison III, and BFH Mining LTD., 14-15-00058-CV

Parties: Harrison reserved 5% royalty interests in 1990 royalty agreement; Meridian (later Dominion, then HighMount) was producer; dispute arose after HighMount's royalty accounting and audit.
Facilities/facts: Subject Interests' gas is gathered at field separators and delivered mostly (≈95%) to a central facility (DP6) via two streams: a rich stream (20-inch) and a lean stream (8-inch); rich gas is further processed downstream at Sonora before sale; some gas is consumed as fuel to run compressors/gathering equipment.
Contract mechanics: Agreement measures royalties as Owners’ share of "gross proceeds" on first sale or on "residue gas" after processing; permits Owners’ share of Producer’s monthly "Marketing Costs" up to $0.10/MCF for capital or third‑party charges for property installed "downstream from a central facility" and used to deliver gas to a transmission line.
Procedural posture: Trial court granted summary judgment for Harrison, ordering (1) royalties on gas used as fuel and (2) disallowing marketing deductions; HighMount appealed seeking reversal and remand on marketing-deduction quantum.
Core factual dispute: Whether (a) gas burned as fuel before processing produces "gross proceeds" (triggering royalty), and (b) compression at DP6 qualifies as Marketing Costs because compressors for the rich stream are located downstream from central-facility components.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether royalty is owed on gas consumed as fuel to operate compressors/gathering	Harrison: paragraph 4(e) requires royalty on gas "used for fuel"; thus producer must pay royalties on fuel gas.	HighMount: fuel consumption yields no "proceeds" to Producer; fuel is a post‑production cost shared proportionally and royalties are measured on "residue gas" after processing.	Court below awarded royalties on fuel; on appeal HighMount argues reversal — contract read as whole means no royalty on fuel because no proceeds and residue-gas measurement precludes it. (Appellant requests reversal.)
Whether compression charges are deductible as Marketing Costs up to $0.10/MCF	Harrison: compressors at DP6 are not "installed downstream from a central facility," so compression costs are not Marketing Costs.	HighMount: rich-gas compressors are downstream from central-facility heaters/separators/meters (per contract definition) and thus qualify; lean-gas compressors differ.	Trial court disallowed marketing deductions entirely; HighMount seeks remand because record creates a fact question and shows rich-gas compression qualifies for the $0.10/MCF deduction.

Alamo Nat'l Bank v. Hurd, 485 S.W.2d 335 (Tex. Civ. App. 1972) (discussing treatment of overriding royalties as royalties)
Atlantic Richfield Co. v. Holbein, 672 S.W.2d 507 (Tex. App. 1984) (industry practice of using produced gas as plant/compressor fuel and treating allocations pre‑settlement)
Birnbaum v. SWEPI, LP, 48 S.W.3d 254 (Tex. App. 2001) (summary judgment upheld that no royalties due on plant/compressor fuel)
Heritage Res. v. NationsBank, 939 S.W.2d 118 (Tex. 1996) (royalty owners must bear proportionate share of post‑production costs absent contrary agreement)
MMP, Ltd. v. Jones, 710 S.W.2d 59 (Tex. 1986) (standard for reviewing evidence in favor of non‑movant on appeal from summary judgment)
Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132 (Tex. 1994) (contract interpretation requires reading instrument as whole and avoiding isolation of clauses)
Royal Indem. Co. v. Marshall, 388 S.W.2d 176 (Tex. 1965) (principles of contract construction and giving effect to parties’ intent)
Santanna Nat. Gas Corp. v. Hamon Operating Co., 954 S.W.2d 885 (Tex. App. 1997) (gas accounting issues and normal pipeline/plant shrinkage)
Read v. Britain, 414 S.W.2d 483 (Tex. Civ. App. 1967) (definition/usage of residue gas and treatment in industry)