In this case, we address two certified questions from the Circuit Court of Roane County which we reformulate 1 into the following single question:
In light of the fact that West Virginia recognizes that a lessee to an oil and gas lease must bear all costs incurred in marketing and transporting the product to the point of sale unless the oil and gas lease provides otherwise, is lease language that provides that the lessor’s 1/8 royalty is to be calculated “at the well,” “at the wellhead” or similar language, or that the royalty is “an amount equal to 1/8 of the price, net of all costs beyond the wellhead,” or “less all taxes, assessments, and adjustments” sufficient to indicate that the lessee may deduct post-production expenses from *269 the lessor’s 1/8 royalty, presuming that such expenses are reasonable and actually incurred. 2
For the reasons that follow, we do not believe that the lease language set forth in the certified question permits CNR to deduct post-production expenses from the lessors’ royalty payments. 3
I.
FACTS
Plaintiffs below are the owners of oil and gas (“lessors”) which have been leased to Defendant Columbia Natural Resources or a predecessor in interest (“CNR”). At least since 1993, CNR has taken deductions from Plaintiffs’ 1/8 royalty for “post-production” costs. These costs include CNR’s delivery of gas from the well to the Columbia Gas Transmission (“TCO”) point of delivery, CNR’s processing of the gas to make it satisfactory for delivery into TCO’s transportation line, and losses of volume of gas due to leaks in the gathering system or other volume loss from the well to the TCO line.
The post-production deductions taken by CNR include both monetary and volume deductions. CNR took deductions from royalty owners in equal amounts regardless of the distance from the well to TCO’s transportation line. Even though CNR sent royalty checks to the lessors with an accounting of the purported amount of gas produced from the well, the purported price for which the gas was sold, and the puiported amount of the royalty, CNR did not disclose on the accounting statements that deductions were taken.
Lessors have brought a class action suit against CNR for damages due to the allegedly insufficient royalty payments. There are approximately 8,000 Plaintiffs with 2,258 leases of varying forms and types. According to CNR, at least 1,382 leases at issue have language indicating that the royalty payment is to be calculated “at the well,” “at the wellhead,” “net all costs beyond the wellhead,” or “less all taxes, assessments, and adjustments.” CNR moved for summary judgment on the basis that the above lease language is clear and unambiguous and allows the lessee to deduct the royalty owners’ proportionate share of post-production expenses, provided such expenses are actual and reasonable.
By order of October 14, 2005, the circuit court denied CNR’s motion for summary *270 judgment and certified two questions to this Court which we have reformulated as indicated above.
II.
STANDARD OF REVIEW
This Court reviews a circuit court’s answer to a certified question
de novo. See
Syllabus Point 1,
Gallapoo v. Wal-Mart Stores, Inc.,
III.
DISCUSSION
It is the position of CNR that the “at the wellhead”-type language at issue in this case is clear and unambiguous and provides that the lessee may deduct the post-production costs of gas from the lessors’ 1/8 royalty payments. Specifically, CNR explains that “at the wellhead” language indicates that the gas is to be valued for the purpose of calculating the lessors’ royalty at the wellhead. However, the gas is not sold at the wellhead. In fact, the gas is not sold until the lessee adds value to it by preparing it for market, processing it, and transporting it to the point of sale. Thus, CNR concludes that the only logical way to calculate royalties at the wellhead is to permit lessees to deduct the lessors’ proportionate share of post-production expenses, i.e., transportation and processing costs, from the total price received by the lessee.
The lessors, in contrast, assert that the “at the wellhead”-type language at issue is either silent or ambiguous on the subject of the allocation of post-production costs between the lessor and the lessee, and thus the language should be construed against the lessee. Further, because the lease language does not expressly address the allocation of post-production costs, the lessors posit that, pursuant to the lessee’s implied covenant to market the gas recognized in Syllabus Point 4 of
Wellman v. Energy Resources, Inc.,
Both the lessors and CNR cite for support cases from other states which indicate to us that courts are divided on the effect of “at the wellhead”-type language on the allocation of post-production costs between the lessor and the lessee. For example, in
Creson v. Amoco Production Co.,
The Colorado Supreme Court took the opposite approach in
Rogers v. Westerman Farm Co.,
This Court finds it unnecessaiy to adopt wholesale the reasoning of either of the courts above in answering the question before us. Instead, we simply look to our own settled law. We begin our analysis with the recognition that traditionally in this State the landowner has received a royalty based on the sale price of the gas received by the lessee. In Robert Donley, The Law of Coal, Oil and Gas in West Virginia and Virginia § 104 (1951), it is stated:
From the very beginning of the oil and gas industry it has been the practice to compensate the landowner by selling the oil by running it to a common earner and paying to him [the landowner] one-eighth of the sale price received. This practice has, in recent years, been extended to situations where gas is found[.]
“The one-eighth received is commonly referred to as the landowner’s royalty.”
Wellman v. Energy Resources, Inc.,
In Davis v. Hardman,148 W.Va. 82 ,133 S.E.2d 77 (1963), this Court stated that a distinguishing characteristic of [the landowner’s royalty] is that it is not chargeable with any of the costs of discovery and production. The Court believes that such a view has been widely adopted in the United States.
In spite of this, there has been an attempt on the part of oil and gas producers in recent years to charge the landowner with a pro rata share of various expenses connected with the operation of an oil and gas lease such as the expense of transporting oil and gas to a point of sale, and the expense of treating or altering the oil and gas so as to put it in a marketable condition. To escape the rule that the lessee must pay the costs of discovery and production, these expenses have been referred to as “post-production expenses.” ...
The rationale for holding that a lessee may not charge a lessor for “post-production” expenses appears to be most often predicated on the idea that the lessee not only has a right under an oil and gas lease to produce oil or gas, but he also has a duty, either express, or under an implied covenant, to market the oil or gas produced. The rationale proceeds to hold the duty to market embraces the responsibility to get the oil or gas in marketable condition and actually transport it to market.
Wellman,
*272 4. If an oil and gas lease provides for a royalty based on proceeds received by the lessee, unless the lease provides otherwise, the lessee must bear all costs incurred in exploring for, producing, marketing, and transporting the product to the point of sale.
5. If an oil and gas lease provides that the lessor shall bear some part of the costs incurred between the wellhead and the point of sale, the lessee shall be entitled to credit for those costs to the extent that they were actually incurred and they were reasonable. Before being entitled to such credit, however, the lessee must prove, by evidence of the type normally developed in legal proceedings requiring an accounting, that he, the lessee, actually incurred such costs and that they were reasonable.
Accordingly, the present dispute boils down to whether the “at the wellhead”-type language at issue is sufficient to alter our generally recognized rule that the lessee must bear all costs of marketing and transporting the product to the point of sale. We conclude that it is not.
As noted by CNR, “[a] valid written instrument which expresses the intent of the parties in plain and unambiguous language is not subject to judicial construction or interpretation but will be applied and enforced according to such intent.” Syllabus Point 1,
Cotiga Development Co. v. United Fuel Gas Co.,
We believe that the “wellhead”-type language at issue is ambiguous. First, the language lacks definiteness. In other words, it is imprecise. While the language arguably indicates that the royalty is to be calculated at the well or the gas is to be valued at the well, the language does not indicate how or by what method the royalty is to be calculated or the gas is to be valued. For example, notably absent are any specific provisions pertaining to the marketing, transportation, or processing of the gas. In addition, in light of our traditional rule that lessors are to receive a royalty of the sale price of gas, the general language at issue simply is inadequate to indicate an intent by the parties to agree to a contrary rule — that the lessors are not to receive 1/8 of the sale price but rather 1/8 of the sale price less a proportionate share of deductions for transporting and processing the gas. Also of significance is the fact that although some of the leases below were executed several decades ago, apparently CNR did not begin deducting post-production costs from the lessors’ royalty payments until about 1993. Under these circumstances, we are unable to conclude that the lease language at issue was originally intended by the parties, at the time of execution, to allocate post-production costs between the lessor and the lessee.
CNR asserts, however, that when read with accompanying language such as “gross proceeds,” “market price,” and “net of all costs,” the wellhead-type language clearly calls for allocation of post-production expenses. We disagree. First, we note that the word “gross” implies, contra*y to CNR’s interpretation, that there will be no deductions taken. Hence, the phrase “gross proceeds at the wellhead” could be construed to mean the gross price for the gas received by the lessee. On the other hand, the words “gross proceeds” when coupled with the phrase “at the wellhead” could be read to create an inherent conflict due to the fact *273 that the lessees generally do not receive proceeds for the gas at the wellhead. Such an internal conflict results in an ambiguity. Likewise, the phrase “market price at the wellhead” is unclear since it contemplates the actual sale of gas at the physical location of the wellhead, although the gas generally is not sold at the wellhead. In addition, we believe that the phrase “net of all costs beyond the wellhead” could be interpreted to mean free of all costs or clear of all costs beyond the wellhead which is directly contrary to the interpretation urged by CNR. Finally, CNR also claims that the phrase “less all taxes, assessments, and adjustments” clearly indicates that post-production expenses can be deducted from the lessors’ royalties. Again, we disagree. Absent additional language that clarifies what the parties intended by the words “assessments” and “adjustments,” we believe these words to be ambiguous on the issue of the allocation of post-production expenses.
CNR also cites for support this Court’s statement in Wellman that,
the language of the leases in the present case indicating that the “proceeds” shall be from the “sale of gas as such at the mouth of the well where gas ... is found” might be language indicating that the parties intended that the Wellmans, as lessors, would bear part of the costs of transporting the gas from the wellhead to the point of sale[.]
CNR further cites for support
Cotiga Development Company v. United Fuel Gas Company,
Having found the language at issue ambiguous, the lessors urge that the language should be construed against CNR consistent with “[t]he general rule as to oil and gas leases ... that such contracts will generally be liberally construed in favor of the lessor, and strictly as against the lessee.” Syllabus Point 1,
Martin v. Consolidated Coal & Oil Corp.,
We choose to adhere to our traditional rule and construe the language against the lessee. Significantly, CNR drafted the “the wellhead”-type language in dispute. Under our law, “[uncertainties in an intricate and involved contract should be resolved against the party who prepared it.” Syllabus Point 1,
Charlton v. Chevrolet Motor Co.,
It is also CNR’s position that having found the disputed lease language herein ambiguous, the rules of interpretation require that the intent of the parties now be determined by the finder of fact. This is incorrect. Under our law, “ ‘[i]t is the province of the court, and not of the jury, to interpret a written contract.’
Franklin v. Lilly Lumber Co.,
Accordingly, this Court now holds that language in an oil and gas lease that is intended to allocate between the lessor and lessee the costs of marketing the product and transporting it to the point of sale must expressly provide that the lessor shall bear some part of the costs incurred between the wellhead and the point of sale, identify with particularity the specific deductions the lessee intends to take from the lessor’s royalty (usually 1/8), and indicate the method of calculating the amount to be deducted from the royalty for such post-production costs. We further hold that language in an oil and gas lease that provides that the lessor’s 1/8 royalty (as in this case) is to be calculated “at the well,” “at the wellhead,” or similar language, or that the royalty is “an amount equal to 1/8 of the price, net all costs beyond the wellhead,” or “less all taxes, assessments, and adjustments” is ambiguous and, accordingly, is not effective to permit the lessee to deduct from the lessor’s 1/8 royalty any portion of the costs incurred between the wellhead and the point of sale.
IV.
CONCLUSION
For the reasons set forth above, we answer the reformulated certified question as follows:
In light of the fact that West Virginia recognizes that a lessee to an oil and gas lease must bear all costs incurred in marketing and transporting the product to the point of sale unless the oil and gas lease provides otherwise, is lease language that provides that the lessor’s 1/8 royalty is to be calculated “at the well,” “at the wellhead” or similar language, or that the royalty is an amount equal to 1/8 of the price, net all costs beyond the “wellhead,” or “less all taxes, assessments, and adjustments” sufficient to indicate that the lessee may deduct post-production expenses from the lessor’s 1/8 royalty, presuming that such expenses are reasonable and actually incurred?
Answer: No.
Certified question answered
Notes
.
See
Syllabus Point 3
of Kincaid v. Mangum,
. In its order to this Court, the circuit court certified the following two questions:
Where the royalty language is as set out in Exhibit A [see below], may a lessee of oil and gas in West Virginia deduct money and/or volume from the lessor’s 1/8 royalty payments for post-production expenses, where the lease does not provide specifically that the lessee may take such deductions from the royalty?
The circuit court answered this question in the negative.
Where in an oil and gas lease there is no specific provision allowing for deduction of post-production expenses!,] does language such as "wholesale market at the well,” “amount realized at the well," "net revenue realized,” "1/8 of price,” "net of all costs beyond the wellhead,” and other language as set forth in Exhibit A, grant to the lessee the right to deduct post-production expenses from the lessor's royalty (assuming for purposes of this question that such expenses were reasonable and actually incurred)?
The circuit court also answered this question in the negative.
Exhibit A, referred to in the circuit court’s certified questions, contains, by our count, at least 35 different kinds of lease language. Significantly, the certified questions arise from CNR’s motion for summary judgment which was denied. See W.Va.Code § 58-5-2 (1998) (indicating that ”[a]ny question of law, including, but not limited to, questions arising upon the sufficiency of ... a motion for summary judgment where such motion is denied ... may ... be certified ... to the Supreme Court of Appeals for its decision”). CNR’s motion requested summary judgment only as to leases with the language "at the well,” "at the wellhead" (or similar language), or that the royalty is to be "one-eighth of the price, net all costs beyond the wellhead,” or "less all taxes, assessments, and adjustments.”
• We agree with CNR that the certified questions formulated by the circuit court go beyond the scope of CNR's motion for summary judgment in that the questions include lease language never placed in issue by CNR’s motion for summary judgment. Accordingly, we decline to answer the questions as certified and reformulate the questions as indicated in the text of this opinion.
. At this point we wish to acknowledge the valuable contributions of Amici Curiae Independent Oil and Gas Association of West Virginia, Inc. and West Virginia Oil and Natural Gas Association who filed briefs in support of the position advanced by Columbia Natural Resources.
. Three articles which are instructive on this issue are Randy Sutton, J.D., Sufficiency of "At the Well" Language in Oil and Gas Leases to ALIocate Costs, 99 A.L.R.Slh 415 (2002); Jefferson D. Stewart and David F. Marón, Post-Production Charges To Royalty Interests: What Does The Contract Say And When Is It Ignored? 70 Miss. L.J. 625 (2000); and Owen L. Anderson, Royalty Valuation: Should Royalty Obligations Be Determined Intrinsically, Theoretically, or Realistically? (Part I) 37 Ñat. Resources J. 547 (1997).
. In Syllabus Point 4 of
Watson v. Buckhannon River Coal Co.,
While the general rule is that the construction of a writing is for the court, yet where the meaning is uncertain and ambiguous, parol evidence is admissible to show the situation of the parties, the surrounding circumstances when the writing was made, and the practical construction given to the contract by the parties themselves either contemporaneously or subsequently. If the parol evidence be not in conflict, the court must construe the writing; but, if it be conflicting on a material point necessary to interpretation of the writing, then the question of its meaning should be left to the jury under proper hypothetical instructions.
. CNR also asserts that the leases' so-called "marketing clause” which provides that "the time and method of marketing ... shall be within the sole discretion of the lessee,” when read with the "at the wellhead” language, unquestionably indicates that CNR is entitled to deduct post-production expenses from the lessors’ royalty. We disagree and fail to see how the marketing clause language sheds any light on the issue herein.