Even though executive right holder Steadfast Financial failed to latch on to market-rate oil and gas royalties in its lease negotiations, it did not self-deal or breach its duty of good faith owed to nonparticipating royalty interest owner Betty Lou Bradshaw, the Texas Supreme Court ruled last week.
The ruling in Steadfast Financial v. Bradshaw involves an oil-and-gas lease on nearly 2,000 acres in Hood County. Bradshaw, the nonexecutive owner, claimed Steadfast Financial, the executive now known as KCM Financial, breached its fiduciary duty by executing a mineral lease on terms that included a submarket royalty rate, which the executive and nonexecutive would share equally, in exchange for an above-market bonus payable only to the executive, according to the March 6 opinion written by Justice Eva Guzman.
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