Citations
- 716 S.W.2d 656
Full opinion text
OPINION
BENAVIDES, Justice.
This appeal involves a gas lease by which appellant (Cabot) was found to have breached its implied duty to reasonably market the gas in issue and was held liable for its failure to pay appellees the market value of their gas royalties. Based upon the jury’s answers to special issues, the court awarded appellees damages of $424,-083.14, plus attorney’s fees of $44,000.00, post-judgment interest, and court costs.
This case was submitted on stipulated facts. On August 15,1967, Cabot Corporation (Cabot) and Transwestern Pipeline Company (Transwestern) entered into a contract labeled “Exchange of Gas, Texas Panhandle.” Cabot commenced delivery of gas on March 8, 1968.
Leases between Cabot and appellees regarding gas produced from Kelln Well No. 1 require Cabot to pay royalties to appel-lees based on the market value of the gas produced at the wellhead, in the event that gas is used or sold off the premises.
The Kelln gas was transmitted by Cabot to Transwestem’s pipeline through Cabot’s gasline. The gas volume is metered before being placed in Transwestem’s pipeline to determine the volume delivered by Cabot. The Transwestem pipeline is part of an interstate gas transmission system which extends from Texas to California. The Kelln gas is delivered into a portion of Transwestem’s interstate gas transmission system located in Roberts County, Texas. The delivery point of the exchange gas received by Cabot from Transwestern is located in Gray County, Texas. The gas volumes are also metered there to determine the volumes delivered by Transwest-em to Cabot.
At all times material to this suit, the gas from Transwestern to Cabot is transported to Cabot’s Kingsmill Gas Processing plant in Gray County, where it is commingled with and processed with gas produced or purchased by Cabot or its affiliates from the intrastate market. From March 1977 to the present, the majority of the residue gas remaining after processing has been disposed of through the intrastate market.
Cabot paid Transwestem 2