Our family has 300 acres of minerals under a 500 acre track of of land in Nueces County, TX. but we do not own any of the surface. A representative of the company called to tell me that we needed to sign off on a contract to allow them to proceed. He also said he would leave 4 one acre drill sites of our choosing. Its had 3 good Frio wells on it in the past along with a couple of dry holes which is normal for the Frio formation. I told the guy no to signing off on his contract unless he made it really lucrative which he added $75 per an acre a year for 35 years with 1 present increase per a year for inflation. This still seems low to tie up 300 mineral acres for the next 35 years! Anyone else run into a situation like this?
Definitely hire an attorney to review. You could really mess up the right to develop minerals possibly render them nearly worthless.
minerals are dominant in texas - right? so if someone wants to drill it doesn’t matter about those solar panels, they have to go - correct?
Yes, absent an agreement the surface owner (easement holder) cannot prevent the development of minerals. But this changes the mineral owner signs the agreement it might subordinate the rights to the solar farm.
In other words, the surface can put on a solar farm but this cannot interfere with the mineral owner’s right to develop unless the mineral owner agrees. That is why they are trying to get the concession.
*As an Oklahoma attorney, I say hire a Texas attorney.(
Thank you Sir, just don’t know what the price should be???
A one acre drill site is too small. Horizontal well pads are generally around 5+ acres. A shallow vertical well needs 2 acres.
Basically what I’m saying is if we don’t agree to a cheap lease price they will go ahead and build their solar farm and never agree to any oil and gas leases so it won’t interfere with their solar panels.
If they build the solar farm without your agreement, then any oil and gas lessee can simply rip it out. The mineral estate is dominant over the surface estate in Texas. I expect that the solar company has told the surface owners that it will not build the solar farm without the consent of at least the majority ownership of the minerals. The solar agent is not going to tell you this. Only you can judge the value of your minerals and the potential loss of future drilling. Or balance the loss of the proposed solar revenues against the risk that no one will ever lease or drill the minerals. If you decide to consent and lease, then be sure to insist on reservation of 5 acre well pads. You may also want to be sure that there is an open strip across the section which is sufficiently wide to accommodate gas, oil and water pipelines. You can demand any rental per acre per year that you think is reasonable. For the inflation, you can set the higher of 1% per year or the CPI for the inflation adjustment. Consider consulting an attorney who is experienced in oil and gas and in solar for advice.
Thanks TennisDaze, I really don’t like the deal and on top of that I don’t like solar panels either! The other problem we have is the other 200 undivided acres of minerals that are under the 500 acres (My family owning 300) belong to the people that are putting in the solar panels! They will not agree with any production or leases in the future because they want their solar farm! It’s getting complicated!
Oh my. That is an odd situation. If you decide to move forward with an agreement with the solar company, be sure to have the document reviewed by an attorney who can explain the legal consequences. Thirty-five years is a very long time, in a sense a sale of your minerals. You would want the agreement to terminate if the solar facility stops being used for some period of time. And reserve sufficient space for mineral development. Valuing your consent is a big question. Perhaps someone can recommend an attorney who represents mineral owners in this situation.
We had a similar situation in Pecos county. Offered a flat 50 bucks to sign off. Our attorney said no way so it was never signed.
Here’s some pure speculation, based on the assumption your area and potential producing formation is logically going to be developed through horizontal drilling. In that case, not having the right to drill anywhere in the tract might not be as critical. If the surface/majority mineral interest owner in the tract needs your agreement so the solar farm can be built there should be a basis for a deal benefiting both sides.
One approach might be to propose that you would sign the release if one big drill site, large enough for multiple wells and production facilities, is designated in the middle of the 500 acres, and to assure that you have freedom to lease your minerals, the majority mineral owner grants you the executive rights to their mineral interest…they still get their bonuses and royalties but you have sole control of negotiating leases on the whole 500 acres. Obviously you would want to get all of that nailed down legally.
Another point it might be worth finding out is how much it would cost to remove and replace five acres of solar panels. That may be a big number but if the solar company and the surface owner want the deal bad enough maybe they would grant the right for two or more sites to be cleared any time in the future for as long as needed for drilling and production. If there was no drilling it would never affect their operation. Maybe they could even buy insurance against that happening. Combine that right with control of the executive rights like mentioned above and you might have a deal.
Keep in mind that it is not just a site to drill, you may be looking at the need for pipelines, etc.
I really don’t think an oil company can come in and just rip out solar panels so they can drill wells. But both surface and mineral owner should be able to profit from their property. Include a clause similar to this and hopefully solar and oil and get fully developed and be beneficial to all parties:
Access to Minerals Provision. Operator agrees to leave unimproved five (5) drill pad areas (approximately 300 ft x 300 ft) per each 640 acre section of land and unimproved access routes 30 ft wide from each drill pad area to a public road and such areas shall be excluded from the Premises and the calculation of per/acre rent. The intent of these drill pad areas and access roads is to leave the Owner or mineral rights holder adequate space in case oil/gas drilling operations are ever contemplated. Owner agrees that, in conducting operations of any nature whatsoever with regard to minerals (including without limitation, in exploring for, testing for, drilling for, mining, extracting, producing, taking, processing, storing, transporting, marketing or otherwise developing oil, gas, and/or minerals of any kind or nature on or from the Premises): (i) all drilling and mineral extraction shall take place at least _______ feet below the surface of the land, (ii) no excavation or extraction shall affect subjacent or lateral support for the solar power facilities installed on the Premises, or undermine or adversely affect the stability of the solar power facilities, and (iii) neither Owner nor its agents, contractors, sublessees, grantees, tenants, invitees, licensees, successors or assigns shall (and Owner hereby waives any rights it has to) use, enter upon, occupy, drill wells on, or place or construct any buildings, facilities, structures, improvements, equipment, machinery or other property (collectively, “Mineral Facilities”) on any portion of the surface of the Premises. Owner further agrees that its rights related to the extraction of minerals are subordinate to any and all activities of Operator on the surface of the Premises and shall not impair the ability of Operator to undertake its business activities on the surface of the Premises. If Operator determines that Owner does not own all of the mineral estate, Owner shall cooperate with, assist, and facilitate, Operator’s efforts to obtain surface rights waiver instruments or non-interference agreements from the holders or lessees of the mineral estate (such surface rights waivers or non-interference agreements to be in the form required by Operator).
I have read that the Wind Farm Leases are subject to the Oil Company that has lease below the Ground. I have a section in Andrews county that is held by 2 barrels of oil each month. We have had inquiries from Wind Mill Farm that is interested. They said they will work with Oil and any Gas Drillers. I call our Oil company that has as leased and asked if they planned any Horizontal Leases in that area, and that we were contacted by a Wind Mill Farm for the section but they would be subject to you. They didn’t seem bothered by it. The Wind Mill Farms might make more than the Oil and Gas.
This language upends Texas law and makes the surface use dominant to the mineral rights. This language is for the benefit of the surface owner and solar company. For a mineral owner who has no surface ownership, this is not advisable without adequate annual compensation. Why else would a mineral-only owner agree that there can never be any “Mineral Facilities” on the surface? Also, a 300 ft X 300 ft well pad is too small for most oil company operations today. Horizontal wells and deep wells generally require 5 acres or more.
Rick: I agree with TennisDaze… and it should probably be just like a water agreement, but they should not be able to stop you from developing your minerals. There is not a lot of these type of arrangements done in this state but get a good Oil & Gas Attorney (maybe someone who does a lot in the Permian Basin) to review the issue for you.
Honestly, I wouldn’t sign anything and here is why.
Basically what the solar farm is doing is providing you pads for directional drilling should a prospect ever fall on our property. I can promise you that this is going to be very problematic for you in the future.
At present day, it is very hard to get a conventional well drilled. Conventional, meaning vertical well-bore intercepting a geological trap. Today, conventional wells that are drilled are usually low risk, low cost, and almost always shallow oil. Forcing a driller to drill directionally will add significant cost to the project. The whole reason for drilling the prospect is the cost.
Even though minerals supersede the surface, a driller will still be required to pay surface damages.
Monetary issues aside, perhaps you would also like to consider your position in light of energy needs and climate change as it affects this country. Solar vs oil. Perhaps you will like to be a pioneer in helping the earth and humans survive. Our decisions should include all aspects, not just money. I encourage you to think on it.
Most of the solar panel deals I have seen are one sided options where they tie up your land for little or nothing until they can shop around and sign up an electricity buyer. Still no comparison on oil royalties from a modern shale well versus surface lease payments from a solar farm. The well income is far superior.
As for the comment about doing the environmentally responsible thing, let’s wait and see how people feel after they see millions of acres of open land get covered with solar panels which is what would be required to go 100% solar.