Lease Ownership vs. Mineral Ownership


#1

I am having some trouble navigating our situation. Several years ago, a company approached us about some minerals we “owned.” Long story short, settled all the paperwork and everything was under certain terms about if the company did not do anything with the land, all rights were returned to us. Well, now we have them back and don’t want to hold on to them (they are located in Custer County), but when we talk to people, we get a little lost. After reviewing our paperwork, it says that we are the owner of the oil and gas leases. What exactly does that mean? How is it that we can own the leases but not the rights? I’ve tried a title/deed search and can’t pull up much or anything that I understand. We’ve tried contacting several people/companies and they’re not sure what to tell us. We are at a dead end and need some assistance!
Thanks!


#2

Can you give more specifics? What was the title of the paperwork you signed and what was the legal description, Section, Township, Range. Anyone can buy a lease from a mineral owner. They become the Lessee and owner of the lease for a period of time. For instance I buy a lease from a mineral owner in Custer County and provide a 1/5 or 20% royalty for three year term. I have three years to drill a well. They would get 20% of any production and I would get 80% less expenses. If the lease expires (no well is drilled) I own nothing. Owning leases can be complicated. Hope this helps.