Mineral Interest vs Royalty Interest

I have mineral interest in Reagan Co. - N/2 of block H, section 15. Unfortunately, I don’t own any royalty interest. Since it’s currently held-by-production and there are new wells soon to be producing what exactly is this property value in the foreseeable future? I believe the lease is for all depths. I do own both royalty and mineral interest in the S/2 as well as in the section to the north - block D, section 10 - if that would have any bearing on the value.

What exactly do you own? Did you execute the lease and then sell all the royalties to ever be received until the lease expires? Did you buy the minerals but the seller retained all royalties under an existing lease? Did you possibly acquire the surface only?

I didn’t execute the lease, that was executed in 1980. The royalties were conveyed in 1948. I have the chain of title explanation from research done by a landman we hired to look into our properties. No surface ownership. I own 6.67 net acres. It’s my understanding that I won’t receive any revenue from the new and existing (1producing) wells with my mineral interest - as opposed to a royalty interest. That being the case, it would seem that my mineral interest is not of any value until production has ceased for the required period of time and then someone decides to drill again, requiring a new lease agreement and a lease bonus payment. Being as how there are new wells going into production very soon I’m wondering what a mineral interest is worth for the foreseeable future.

To echo TennisDave, would need to know what exactly was conveyed out. The language could range from limiting the conveyance to only existing production at the time of execution to any and all future development, irrespective of any existing lease.

I see the distinction you bring up. The landman’s take-off isn’t worded in such a way as to distinguish between complete ownership of the royalty interest or qualified ownership. Since I’m not being paid for the 1 producing well which was permitted in 1980, I assume that the royalty interest was conveyed without qualifications. I should check with Pioneer about all this. Anyway, without any apparent royalty interest, what value does my mineral interest have? I’m not looking for a dollar amount, just want to know what intrinsic value there is in owning mineral interest w/o royalty interest.

The landman should have given you a the recorded deed or assignment which severed the royalty rights or at least the recording information. You can then see if it is a term assignment for specified number of years or for life of existing lease or something else. You need the recorded document to be able to know what you own and under what circumstances you will receive royalties. A term assignment could have absolute number of years or go for XX years and as long as production continues. Was there a depth limitation based on existing well or formation? Was there a wellbore assignment only and you could be paid for new wells? There are too many possibilities to answer your question. If you do not have the assignment. Then you can research back through predecessors in title to find it in the deed records.

My landman did provide the recorded deed references (date; vol.; page) for the conveyances. How do I go about getting a copy? Is this info I can give you on the Forum and you would be able to locate and, possibly more difficult, interpret?

There are a number of services which access recorded deeds and charge per page to download. Or some people, especially landmen, have subscriptions with ability to pull deeds. The Reagan County website has a link to a service which appears to have a day rate for deeds which would fit your needs as you can enter book and page to download documents. Short term rates include some pages and rest for additional charge. I have not looked at records in that county. One of the landmen on the forum list could do this for you for a fee.
https://idocmarket.com/Subscription/Subscribe?county=ReaganTX

Below is a link to the website the Reagan County Clerk shows as the place to look up recorded documents. I haven’t used that specific site but if it’s like the ones for other counties you should be able to enter the recording information you have and pull up a copy of the document at no cost. In some cases you can download and print a PDF at no charge but others charge for copies.

If the link doesn’t work, pull up the Reagan County Clerk’s website and click “Online Property Records”. You can also pull up deeds on sites like Texasfile.com or CourthouseDirect.com. Once you set up an account you can search for free but downloading copies will cost a couple of dollars a page.

Thank you TennisDaze and Dusty1for your great insight and advice. I’ll look those records up and will likely have some questions in the near future about how to interpret them. This brings up the question: some of my royalty interests from other properties do not include mineral interest - so far, all the new wells have been paying. I hope that continues to be the case!

If you mean an NPRI (non participating royalty interest) , those are permanent reservation of royalty, such as 1/32 royalty or 1/16 of the royalty. An override would be associated with a lease or well and expire ultimately. Your description in the situation above seems different. Everything depends on the wording in the particular deed or assignment.

I pulled up the mineral deeds which state that the mineral interest was conveyed to another party without any conditions.It’s a straight-up sale, good regardless of any newer leases, and no depth clause. So, back to my original question, what kind of value is a mineral interest without any royalty interest? I have 1/2 mineral interest in the N/2 of blk H, sec 15.

If 100% of the minerals were sold or assigned, then you do not own any minerals and only own surface. Sometimes oil and gas are sold separately and other minerals retained by seller. An attorney or landman could help you to read the deed conveying the minerals to be sure as it depends on the wording.

And if you actually sold all the royalties, and not the minerals, the only value of the remaining minerals would be if you participated as a working interest partner in any future wells, since there would be no royalty in that situation. Otherwise, no royalties means no revenue which means no value.

Would you please explain what a “working interest partner” is? There are wells being fracked right now on this property.

The summary given by my landman, after showing where the entire royalties were conveyed in 1948, is as follows: " So, ‘John Doe’ now owns an undivided 1/2 mineral interest but NO royalty from said lands". There’s at least 1 producing well (permitted 1980) as well as some older, plugged wells from which I’ve never received any payment.

Without seeing the deed history, including the deed assigning the royalties, no one can answer your question. Who is John Doe? Is that your predecessor in title who owned 1/2 minerals and sold the all royalty rights? Or sold all royalties under a lease which is still in effect? Was it oil and gas royalties or royalties for other minerals? When the royalties were sold, if John Doe retained the minerals, did he also retain the lease rights? Who gets any Bonus or Delay rentals for a new lease? This could be quite complex.