I own the surface and 1/2 the minerals on 320 acres in Texas. What do I have the right to receive if I execute an oil and gas lease?
Phil:
You have the right to recieve a negotiated price (Bonus) per acre you lease. In the event of a well being drilled, you have the right to recieve a negotiated % royalty on the production from that well. Your first step is to do your homework and understand what terms you want to negotiate in a lease. Terms such as $/acre, % royalty and length of lease. You can begin by reading posts on this forum which deals (in detail) with negotiating ideas for leasing. You didn't state the area in Texas where your property is located and this is very important in negotiating dollar amounts per acre as "hot" or proven areas will bring much more money. Again, read various posts on this forum and you should better understand the leasing process.
Phil,
As the surface owner, you are putting a lot more at risk in a mineral lease if drilling on your land is anticipated. The Railroad Commission has protection in place for the surface owners but it is better to also get protection in a lease and get paid extra for it. The bonus and royalty you hear about will be applied to your share of the minerals, your 160 net mineral acres. It will be important to your negotiations to know the rights of access to the minerals that the severed mineral owner may have. If you know that owner, you should get together and determine your common economic goals for the land.
For years I managed the mineral rights of the Rock Island Railroad across the country and control of the surface use was of extreme importance to them with mineral development. I currently manage mineral rights of a family that inherited them. If you are in Gaines, Karnes, Gray, Montague, or Van Zandt counties, I have worked out some good mineral leases recently that apply to new drilling technology in multiple productive zones.
The big money to you will come from production if the lease you sign protects you from an operator that "discounts" your royalty earnings with deductions that haven't been clearly defined in the lease. I developed a good lease for the landowner when managing the Rock Island minerals and operators dealing with me have grown to accept being held to honest terms.
You have enough acreage to warrant some help for your own protection which I may be willing to do if your acreage is in a geologic province that I have researched. I work from the ground up using my education and experience as a geologist, engineer, and manager of exploration companies. I don't hold auctions.
The important issues are:
-Who owns the other half mineral rights?
-Who has the executive right? Executive right is the right to lease.
You have the right to receive 100% of the bonus you negotiate for leasing your undivided one half of the minerals and you have the right to 100% of all of the surface damages negotiated with any company engaged in operations on your land. You have the rights to 100% of all of the royalties reserved in the lease, attributable to your undivided one half interest in and to the minerals under 320 acres.
Do you mean that in the case of a 100.00per acre bonus for a 3 year lease I should receive the entire $ 32000.00
James H. McConnell, CPL said:
You have the right to receive 100% of the bonus you negotiate for leasing your undivided one half of the minerals and you have the right to 100% of all of the surface damages negotiated with any company engaged in operations on your land. You have the rights to 100% of all of the royalties reserved in the lease, attributable to your undivided one half interest in and to the minerals under 320 acres.
Not if you own 160 net mineral acres, which is your undivided one half interest.
You will receive mineral royalty payments for your “net mineral acres” only plus any surface compensation if they egress or use your surface rights and need to restore to original condition. If you sign a mineral lease with a driller, you will receive a sign-up bonus plus a percentage of the production to the amount you agree to. Otherwise you can do nothing and be put into a common pool where I believe you will receive the state controlled amount. I don’t know any numbers here…I hope this helps with your research.