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Understanding different types of mineral rights can be beneficial

On Behalf of | Nov 5, 2021 | Oil & Gas Law

Understanding the different types of mineral rights in Texas and Oklahoma can be essential if you’re purchasing a lucrative, oil-rich property or handling paperwork for a business partnership where mineral rights are involved. Becoming familiar with oil and gas rights, surface rights and royalty rights can help you get better prepared for the real estate you’re handling.

Oil and gas rights

Defining mineral rights for oil and gas can be challenging due to their fluidity. Both of these substances can move through joints and faults in the land, spreading to adjacent real estate that you may not own. These fluid minerals that can flow into other properties may be extracted. If this occurs, they are known as fugitive resources. Anyone who drills a well on adjacent property where the oil flows can collect it due to the “rule of capture” right.

Mineral interests

Mineral interests refers to ownership of mineral rights, allowing you to explore mineral production activities in a given location. If you’re an owner of subsurface rights, you can receive lease, royalty and shut-in payments. Shut-in payments can be complex to deal with, requiring several groups to manage and potentially involving litigation if there’s ever a dispute.

Surface rights

Surface rights provide you with ownership rights to minerals on the surface only. Any minerals located in the subsurface are not included. Land that’s owned under a surface rights contract may be manipulated, transferred or sold by its owner according to the guidelines of the local government.

Mineral rights are applied differently to oil and gas and hard rock minerals. Understanding mineral rights can better be done by exploring the different types of minerals and classifying them.

Leasable rights

The rights to fluid minerals, such as oil and gas, that move below the surface are usually leased. The Bureau of Land Management issues two types of leases for oil and gas exploration and development: competitive and noncompetitive.

Whether you own property with oil and gas or you have property adjacent to an area where oil and gas are flowing, it’s important to understand all these matters. You want to make sure you understand your rights as well as how to profit from them.