Landowners, be prepared
Mineral rights can be a confusing situation for landowners. Many times, people will come in from out of town seeking to drill on or harvest minerals on an individual’s land while searching for some sort of commodity like oil. Knowing your rights can help ensure that if you do decide to lease or sell your mineral rights you will receive a proper reward for your investment. Also, it is worthy to note that choosing to relinquish those rights may affect your quality of life since the crews exploring and harvesting those minerals will be free to roam and dig up your land with tankers, trucks, and other heavy equipment. It is also good to consider how those choices will affect the generations after you.
As a landowner, you may or may not own the property rights of the land you currently have your estate on. According to the Railroad Commission in an article titled Exploration & Surface Ownership, “under Texas law, land ownership includes two distinct sets of rights, or “estates”: the surface estate and the mineral estate. Initially, these two estates were owned by the same person and they may continue to be owned together by one person.
“However, in many areas of Texas, especially those where there has been extensive historical oil and gas development, it is common for the mineral estate and surface estate to be owned by different people. The division, or “severance,” of the mineral estate and surface estate occurs when an owner sells the surface and retains all or part of the minerals (or, less commonly, an owner sells the minerals and retains the surface). If an owner does not explicitly limit the transfer of ownership to the “surface only” or explicitly retain the minerals when selling the surface, the mineral estate he owns automatically is included in the sale.”
If you are not sure what you own, you may start by doing research at the County Courthouse. Once you find out what you own, you can begin to explore the possibility of leasing your land for mineral rights. Or being prepared when an outside firm comes knocking on your door with an offer you can’t refuse.
Forbes, Joseph DeWoody, Forbes Councils Member, says that “oil and gas companies, landmen, and mineral rights buyers have a distinct advantage over you because they have more information. For example, oil companies can use various tactics to underpay a mineral rights owner. Sometimes they underreport well production or the price they were paid to sell the oil. They can also sell the oil and natural gas to an affiliated company at a lower price so that they can pay the mineral owners less.”
Dewoody lays out in an article on Forbes.com in ways people have been taken advantage of or “missed out on what they are owed.:
• Not knowing what people in the surrounding area are being paid for their oil leases.
• Having wells drilled on or across their land without knowing.
• Not understanding what they are signing.
• Not being paid the correct amount for their share of the production.
It is also important to be aware of clauses like companies having access to the particular mineral they are seeking as well as “ALL OTHER MINERALS.” Hypothetically, what if they found a precious mineral like gold while searching for Oil. Here in Cass County, it is rumored to be sitting on a Lithium deposit. Based on the contract you signed you will probably lose out on that financial boon if it were to happen.
For that reason, before signing on the dotted line it is important to do as much research as possible. State oil and gas agencies, and the railroad commission that handles mineral rights, all have websites you can do research on.
Discussions with trustworthy financial consultants and finding a reputable lawyer that specializes in land rights is a must. You should also connect with local officials. Don’t be afraid to ask lots of questions and get answers before you make agreements. Don’t allow yourself to be bullied or pressured into making a decision that could make a huge impact on your life.
Lastly, you should know that by leasing or selling your rights that, according to the Railroad Commission “Lessees have broad rights to use the surface for the purpose of exploring for and producing oil and gas. These rights include the right to: conduct seismic testing; drill wells at locations they select; enter and exit well sites and other facilities; build, maintain and use roads for access to and from well sites and facilities; build and use pipelines to serve wells and facilities on the property; use surface and subsurface water on the leased premises for drilling and production operations; and drill and operate injection wells to enhance lease recovery and dispose of lease-produced water.”
It may be worthwhile to specifically define in any contract what areas they will have access to on your land and that you will continue to have permission to drill water wells for personal and livestock use.