Background:

• Enerplus and Harvest are involved in a 2005 Farmout and Option Agreement, where Enerplus retained an overriding royalty (the "Enerplus Royalty") from Harvest's working interest in oil and gas lands.

• Harvest opted out of developing wells proposed by Orlen, while Petrus participated.

• Enerplus sought $1.2 million in royalties, arguing it was entitled to payment despite Harvest's non-participation.

• Harvest denied the claim, contending royalties don’t accrue during the penalty period of non-participation.

Claims:

• Enerplus asserted that Harvest, or alternatively Orlen or Petrus, owed the royalty payments.

• Harvest sought summary dismissal, arguing that Enerplus’ interpretation violated their agreement and legal precedents in oil and gas law.

Court Decision:

• The court upheld the Master's summary dismissal of Enerplus’ claim, agreeing that the royalty was not payable during the penalty period when Harvest did not participate in the well development.

• The appeal was dismissed, as the reasons for the Master’s decision did not impact the remaining claims against Orlen and Petrus.

• Harvest was awarded costs of the action against Enerplus. The exact amount is not specified in the decision.

Key Points:

• Overriding royalties are not due if the party elects not to participate in development under the Joint Operating Agreement.

• The court clarified that appeals focus on judgments or orders, not the reasons behind them, especially when obiter dicta (non-binding commentary) is involved.