Questar Exploration and Production Company, now known as QEP Energy Company, a Texas corporation Wexpro Company, a Utah corporation v. Rocky Mountain Resources, LLC, 2017 WY 10

Background

In 1953 Walter Davis assigned two state oil and gas leases (the 505 and 529 Leases) reserving a 4% overriding royalty and using the State Land Board’s standard assignment form stating the reservation extended to any “renewal lease, substitute lease or new lease issued in lieu thereof with full effect.”
The 505 and 529 Leases entered the Pinedale Unit, later contracted and terminated in 1979; the State combined the acreage and reoffered it at public drawing as Parcel 526.
Dr. Robert Ribbe won the 1979 public drawing and received a new 640‑acre state lease (the Ribbe Lease) with materially different terms; Ribbe later sold the lease to Mountain Fuel Supply (eventually assigned to QEP/Wexpro successors).
Rocky Mountain Resources (RMR), successor to Davis’s interests, sued QEP and Wexpro claiming Davis’s 4% overriding royalty attached to the Ribbe Lease under the assignment language and sought unpaid royalties; district court granted partial summary judgment for RMR and a jury awarded >$30 million in past royalties.
On appeal the Wyoming Supreme Court framed the dispositive question as whether the Ribbe Lease was a “renewal lease, substitute lease, or new lease issued in lieu of” the prior leases and conducted an independent contract‑interpretation analysis.
The Court held the Ribbe Lease was a wholly new lease issued after expiration by public drawing to a different lessee on different terms, so Davis’s 4% interest did not extend to the Ribbe Lease; reversed and remanded with instructions to enter summary judgment for QEP/Wexpro.

Issues

Issue	Plaintiff's Argument (RMR)	Defendant's Argument (QEP/Wexpro)	Held
Whether the assignment language extended Davis’s 4% ORRI to the Ribbe Lease	The clause is an anti‑washout/extension provision; the Ribbe Lease covered the same land and was acquired by an assignee of prior operators, so the 4% attached	The reservation ended when the state leases terminated in 1979; the Ribbe Lease is a new lease issued after public drawing and not a substitute or issued in lieu of the originals	Held for defendants: the Ribbe Lease was not a renewal, substitute, or new lease issued in lieu of the 505/529 Leases, so the 4% did not attach
Whether prior State Land Board approval of the 4% made reapproval unnecessary for attachment to a subsequent lease	RMR: initial state approval of the reservation sufficed to bind subsequent replacement leases via the extension language	QEP/Wexpro: subsequent attachment requires the kind of relationship (e.g., substitution or renewal) contemplated by the form; reapproval cannot retroactively bind a new public‑issued lease	Court did not reach this separately after resolving the contract‑language issue in favor of defendants
Whether the extension violates the Rule Against Perpetuities	RMR: clause can be construed to avoid RAP or is not a perpetuity problem	QEP/Wexpro: extension would create an impermissible perpetuity	Court did not need to decide after ruling the Ribbe Lease falls outside the clause
Whether Hartman controllingly made the Ribbe Lease a “replacement lease”	RMR: Hartman held Ribbe Lease was a replacement lease under a related Unit NPI Contract, so same result follows here	QEP/Wexpro: Hartman interpreted different contract language; that decision does not control interpretation of the State assignment form	Held for QEP/Wexpro: Hartman involved different contract language; court must independently construe the State form and it does not include the Ribbe Lease

Key Cases Cited

Ultra Res. v. Hartman, 2010 WY 36, 226 P.3d 889 (Wyo. 2010) (interpreting Unit NPI Contract and concluding Ribbe Lease was a new lease subject to that contract provision)
Union Pac. R.R. Co. v. Caballo Coal Co., 2011 WY 24, 246 P.3d 867 (Wyo. 2011) (standards for contractual interpretation on summary judgment)
Fayard v. Design Comm. of the Homestead Subdivision, 2010 WY 51, 230 P.3d 299 (Wyo. 2010) (summary judgment standard)
Moncrief v. Williston Basin Interstate Pipeline Co., 880 F. Supp. 1495 (D. Wyo. 1995) (oil and gas contracts treated as contracts for interpretation)
Leithead v. Am. Colloid Co., 721 P.2d 1059 (Wyo. 1986) (circumstances where appellate court may direct entry of summary judgment)