Question about leasing mineral rights

Hello All!

We have mineral rights on:

Abstract 595 Blk 20, Section 57 in Howard County.

We are currently receiving royalties off a well that is on the property adjacent to ours.

The question is, “Can we lease our minerals on this property?”

Thank you in advance for any assistance!

Short Answer: probably not

Long answer: If you’re receiving royalties from an adjacent well, the lease covering your acreage was probably pooled together with the adjacent acreage. If the lease didn’t have any pugh language or continuous development, your lease will be held by production so long as that well keeps producing.

You could do a number of things:

  1. sell all or a portion (1/4, 1/2, etc.) of your mineral AND royalty rights.
  2. sell all or a portion (1/4, 1/2, etc.) of royalties in a CERTAIN wellbore (basically a cash flow only deal - you would still get royalties on any future wells drilled)
  3. lease all or a portion (1/4, 1/2, etc.) of royalties in a CERTAIN wellbore for a CERTAIN period of time (basically a cash flow only deal - you would still get royalties on any future wells drilled) this is also called a “term assignment”

Those are just 3 basic examples. Like most deals, things can be altered and fine-tuned to your needs.

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