By: Dick Emens
Emens & Wolper Law Firm
Let’s start with – – “Did the Landowner know that after entering into an oil and gas lease with an oil and gas company, the Landowner still owns 100% of the oil and gas mineral rights?” (Assuming the Landowner owned 100% of the oil and gas mineral rights before leasing).
This is important knowledge for a Landowner. The reason it is important is that there may be landmen knocking on the Landowner’s door trying to buy the oil and gas mineral rights – – both before and AFTER the Landowner has entered into an oil and gas lease.
Oil and Mineral Rights, especially if they have not been leased, are usually much more valuable than oil and gas leasehold rights, and are certainly different than an oil and gas lease. Many Landowners do not realize that.
Oil and Gas Mineral Rights can be defined as:
“The right to search for, develop, and produce oil and gas from land as well as the right to present possession of oil and gas in place”.
Whereas an oil and gas lease may be defined as:
“A document which gives the Lessee the right to use the land and the right to produce and take the oil and gas from the land, usually for as long as oil and gas is produced”.
A Landowner should receive a front end bonus for leasing the oil and gas rights if the Landowner decides to lease. And, once the Landowner has leased the land for oil and gas the Landowner should receive royalties if oil and/or gas is found in producible quantities. But, the Landowner’s use of the surface will then be limited by the terms of the lease, but usually not as limited as if the Landowner had sold the oil and gas mineral rights. And, remember, the Landowner still owns the mineral rights even after leasing.
Patty Todd, on behalf of COLA, asked us to limit this article to no more than 300 words and we will stop here as we have exceeded 300 words. If you would like to know more about oil and gas mineral rights, especially the meaning of execution rights, term mineral rights, and the relationship between royalties and mineral rights, please let Patty Todd know or email us at firstname.lastname@example.org .