I am not an expert, but I did chat with an attorney in Texas a few months ago about this. I do not own any surface rights, so I am totally ignorant on that topic. My understanding is that an owner of minerals in Texas can sign a lease, which means he will receive a bonus and royalty payments. If he does not sign a lease, he gives up the right to any bonus. He becomes a working-interest owner, or something similar to that, and his share of the gross revenue (from sales of produced oil and gas) are applied against his share of the drilling and operating costs. After his share of the revenue has covered his share of drilling costs, then he starts to receive his share of the revenue. Furthermore, I was told that in Texas the operator can't go after the unleased mineral owner for his share of a dry hole, plugging costs, etc., which could be a downside risk of not leasing in some states.
Suppose I own 20% of the minerals under 320 gross acre, and suppose the well will be deemed to cover that same 320 gross acres, and suppose the well produces oil and gas sold for $5 million per year. If I leased at 25%, 3-year term, bonus of $2000 per nma, I would get a bonus of $128,000, and my royalty checks would be $250,000 per year. If I refused to lease, I get zero bonus, and my 20% of the $5 million would go to cover my 20% of the cost to drill. Eventually, after my 20% of revenue covers my 20% of drilling costs, I would receive working-interest (or similar) payments of $1 million per year [minus operating costs???].
My best guess is that a small-time mineral owner is vulnerable to operator accounting tricks, such as amortizing capital equipment costs and so on to the drilling. The WI owners bear their pro rata share of what I call "other deductions", e.g. transportation, etc. If the well is not profitable, the mineral owner may come to realize he would have done better to make a lease and get a bonus. If the well is quite profitable, the mineral owner might make more money over the long term by going for the WI (working interest) rather than the RI (royalty interest). If the lessee doesn't have 100% of the minerals leased, it reduces the likelihood he will drill, all other factors being equal.
Oh, one other vulnerability which I think my attorney had explained, but I am very fuzzy about this. Suppose I own that 20% of minerals under the south half of a section, and suppose the well is drilled in the NE/4 (outside the area I own in), and suppose the well is deemed to be the E/2 of the section (includes the SE/4 where I own). If I were leased, I would be in the well unit, prorata for my 20% under half of the gross acres, i.e. I owned 20% of the minerals in the SE/4 which is half of the E/2. But if I were not leased, I would get zip, because I don't own in the NE/4 where they drilled. Is this correct?
I hope Buddy will come along and comment. . .