What are mineral rights?
Mineral rights entitle a mineral owner to either a.) extract a resource from the earth, or b.) allow third parties to do so and then receive payment, in the form of royalties.
Does owning the land give me mineral rights?
Owning a property does not automatically grant the owner the mineral rights. Also, an owner may sell surface rights, but retain the mineral rights. A search of your deed or property title may disclose whether you own the mineral rights. If your current deed does not specifically discuss minerals, consult the deeds of previous owners – a former owner may still retain mineral rights.
What is a mineral lease agreement?
A mineral lease agreement is a legally binding contract that grants a company the right to extract and produce natural gas or oil from the mineral owner’s property. Typically, the owner of the mineral rights is paid a fee when such a lease is signed or when title is confirmed. After a well is drilled, the mineral owner will receive a recurring payment based on the well’s production and the price of natural gas. This is known as a royalty payment.
What should I take into consideration before making a mineral lease agreement?
There are several factors to take into consideration before and during the leasing process:
- The leasing company may be different from the drilling and production company. Make sure you know which is which.
- The reputation and stability of both the leasing company and the producer.
- How many leases has the company generated in your area?
- What is the leasing company’s relationship to the mineral producer?
- Well-established drilling companies with proven track records will generally produce a better operating well – which means more income for you.
To learn more about factors you should consider when leasing mineral rights, click here.
What are lease brokers?
Lease brokers acquire mineral leases in specific areas for exploration and for production companies to develop. They either work independently or for a lease brokerage firm on behalf of certain operators.
What is the difference between leasing and selling mineral rights?
Leasing is an agreement in which a mineral owner shares the proceeds of any minerals produced from their property with the producer. This agreement only lasts for the length of the lease. Selling mineral rights is a one-time agreement, meaning after the sale you permanently forfeit the right to receive payment for future production.
Should I sell my mineral rights?
Many companies may offer an attractive up-front, one-time payment to purchase your mineral rights. All mineral owners should take the time to carefully consider these types of sales before selling their mineral rights.
What happens if I sell my home?
In Texas, surface ownership and mineral ownership are separate issues. Therefore, it is possible to own surface rights and not the minerals, and vice versa. Even if surface property is sold, the seller may still own the minerals underneath.
Property value or selling price may increase when the minerals are included, or decrease when they are severed. If you plan on retaining mineral ownership when you sell your home, your deed will need to specifically retain these rights.
Where can I find out more information about mineral rights and the leasing of minerals?
For more information, please visit Texas Independent Producers and Royalty Owners Association.