Going through the process of Identifying an asset, finding the Oil, Gas and Mineral Lease and using the Texas Railroad Commission GIS to locate any wells on the property or in the surrounding area.
Being an owner of mineral rights can be very confusing for a landowner. You have probably asked yourself the following questions:
These questions can be difficult to answer and will require a review of the landowners internal documents and possibly further research online or in the courthouse.
First, a basic understanding of the different types of mineral rights is needed so that a landowner knows what type of interest he owns.
There are 6 different types of interest a landowner could possibly own.
After a landowner has a brief understanding of the different types of mineral right ownership, then the next step would be to start reviewing any internal title documentation. This could be Mineral Deeds, Royalty Deeds, Quitclaim Deeds, Probate, Affidavits, Letters and numerous other types of documents they may have. Having just the source deed where the landowner acquired ownership is usually not enough to figure out if the landowner owns any mineral rights or how much interest was actually conveyed. Ex. Bob sold Jim all his interest in a 100 acre ranch and didn’t reserve any of the mineral rights. Jim thinks he owns all of the mineral rights. The problem with this assumption, is that all the minerals were reserved by a previous owner in 1940. Jim would have had to run title all the way back to 1940 to see the minerals were reserved.
Sometimes a landowner might not have enough internal title documentation to figure out their interest, or if and where they own an interest. This will usually require further courthouse records research either online or in the county/parish courthouse.
Even if the landowner never received any mineral rights through a Conveyance or Probate, they could still be an heir of one of their relatives estates. This can happen if Probate Proceedings or Probate documents were not filed in the county/parish where the property was located or if the relative died without a Will. This can create issues when the Oil & Gas Company is trying to pay the unknown heirs on a Oil, Gas and Mineral Lease or a Well. This may require Affidavits or other curative measures to solve the problem.
Here are some of the questions concerning inheritance we hear all the time:
A Testate Succession is when a person dies and leaves a valid Will that has been probated. After the estate has met all existing obligations “debts etc.”, then the estate will be distributed in the manner set out in the Will.
In an Intestate Succession, there is no valid Will for the estate of the deceased. In these instances, usually the Laws of Descent and Distribution for the State where the property is located will govern how the estate will be dispersed to the heirs.
We have shown the Laws of Decent and Distribution for Real Property for Texas and a brief summary for Oklahoma, Louisiana and New Mexico where the person dies married with children.
| Community Property | Separate Property |
|---|---|
| *1/2 to surviving spouse | *Children or heirs of children take all evenly subject to 1/3 life estate to surviving spouse |
| *1/2 to children or heirs of children divided evenly | *1/3 life estate Interest to surviving spouse |
| Community Property | Separate Property |
|---|---|
| *All to surviving spouse | *Children or heirs of children take all evenly subject to 1/3 life estate to surviving spouse *1/3 life estate Interest to surviving spouse |
| Community Property | Separate Property |
|---|---|
| *1/2 to surviving spouse | *Children or heirs of children take all evenly subject to 1/3 life estate to surviving spouse |
| *1/2 to children divided evenly | *1/3 life estate Interest to surviving spouse |
| Community Property | Separate Property |
|---|---|
| *All to surviving spouse | *1/2 to surviving spouse *1/4 to father *1/4 to mother |
| Community Property | Separate Property |
|---|---|
| *All to surviving spouse | *1/2 to surviving spouse *1/4 to parent *1/4 to siblings split evenly or heirs of sibling |
| Community Property | Separate Property |
|---|---|
| *All to surviving spouse | *1/2 to surviving spouse *1/2 to parent |
| Community Property | Separate Property |
|---|---|
| *All to surviving spouse | *1/2 to surviving spouse *1/2 to siblings split evenly or heirs of sibling |
| Community Property | Separate Property |
|---|---|
| *All to surviving spouse | *All to surviving spouse |
| Real Property (Community and Separate Property) |
|---|
| *All split evenly among children or heirs of children |
| Real Property (Community and Separate Property) |
|---|
| *1/2 to mother |
| *1/2 to father |
| Real Property (Community and Separate Property) |
|---|
| *1/2 to parent |
| *1/2 to siblings or heirs of siblings |
| Real Property (Community and Separate Property) |
|---|
| *All to surviving parent |
| Real Property (Community and Separate Property) |
|---|
| *All to siblings or heirs of siblings |
| Real Property (Community and Separate Property) |
|---|
| *1/2 to parental kindred |
| *1/2 to maternal kindred |
| Real Property (Community and Separate Property) |
|---|
| *1/2 to surviving spouse |
| *1/2 to child |
| Real Property (Community and Separate Property) |
|---|
| *1/3 to surviving spouse |
| *2/3 in equal shares to children |
| Real Property (Community and Separate Property) |
|---|
| *1/2 to surviving spouse |
| *1/2 in equal shares to children |
| Community Property | Separate Property |
|---|---|
| *1/2 to surviving spouse plus 1/2 Usufruct on the remaining 1/2 inherited by the children | *Children receive all in equal shares |
| *1/2 to children divided evenly as Naked Owners subject to the Usufruct of the spouse |
| Community Property | Separate Property |
|---|---|
| *All to surviving spouse | *1/4 to surviving spouse |
| *3/4 to child or children in equal shares |
An Oil & Gas Lease is a contract between the owner of mineral rights (Lessor) and another party to drill and produce those minerals (Lessee). Sometimes individuals or companies acquire Oil & Gas Leases with no intent to drill but to sell off the acquired leases for a profit. This is why it is usually best to try and negotiate the Oil & Gas Lease with the actual company that plans on drilling the well, which will maximize bonus consideration and royalty.
The Oil & Gas Lease provides some type of consideration, usually a bonus, for the right to drill a well in a specific amount of time with the landowner receiving a royalty for his part of the production. The Oil & Gas Lease lays out all the provisions of the contract and if certain provisions, such as delay rentals aren’t properly adhered to, it could result in the termination of the Oil & Gas Lease.
Having your minerals subject to an Oil & Gas Lease can be very confusing for the landowner. You have probably asked yourself the following questions:
These questions can be difficult to answer and will require reviewing the provisions in the Oil & Gas Lease along with any well production (See Oil & Gas Well Management).
Here are a few of the most common clauses found in an Oil & Gas Lease.
If you never signed an Oil & Gas Lease, but are receiving revenue off of a producing well, a thorough search either online or in the county/parish courthouse will be required. When looking at your land title, you need to identify if you own a mineral or royalty interest. Royalty interests do not sign Oil & Gas Leases but will sometimes ratify an Oil & Gas Lease for pooling purposes. If you own a mineral interest, a search for Oil & Gas Leases will need to be performed on all previous mineral interest owners to see if they ever executed an Oil & Gas Lease. The Oil & Gas Lease provisions will need to be reviewed along with well production (Please see Oil & Gas Well Management) to determine which Oil & Gas Lease is still active.
If you know where your minerals are located, you can try to find if they are producing or if there is other activity in the area (such as new wells being permitted or drilled).
Click on the above Agency to go to the homepage.
You now know what you own and where the asset is located. You have found your Oil & Gas Lease. Now you can determine if your minerals are producing and if the Lease is Active, or if you are in a hot area with lots of activity. Go to your State Agency and use their GIS to locate your asset and view the wells on or around your property.
LINKS TO GIS FOR Texas, New Mexico, Louisiana
A sworn statement by an individual as to various facts i.e. Affidavit of Heirship, Affidavit of Possession, Affidavit of Identity, Affidavit of Non-Production, etc.
A horizontal well drilled across two or more lease lines without creating a pooled unit.
A unique, permanent well number assigned to each well drilled for oil and gas inthe United States.
The recipient in an Assignment.
A legal instrument where Oil, Gas and Mineral Leases, Royalty Interest, Overriding Royalty Interest or other types of interest are assigned.
The transferor in an Assignment.
Payment for consideration of an Oil, Gas and Mineral Lease but has a waiting period up to thirty business days while the company verifies title.
The abbreviation stands for “barrel of oil”.
Payment made for execution and delivery of an Oil, Gas and Mineral Lease.
The Pooling of smaller federal and/or state tracts to form a Proration Unit.
A single Oil, Gas and Mineral Lease where the property description includes land that is separately owned by two or more persons and that those separate owners are collectively described as the Lessor.
A Royalty created from a sophisticated clause, protecting the Lessor from drainage, which either allows the Lessee to drill an Offset Well or be paid in lieu of drilling such well.
Many states, but not all, allow for unleased mineral interest to be combined or pooled without the consent of the mineral interest owners to qualify for the granting of a well permit.
The bringing together of separately owned mineral or leasehold interests covering a producing Field/Reservoir for the principle purpose of the joint operation of that Field/Reservoir to improve efficiencies and maximize production.
A clause which can be added that allows a company to keep drilling wells within a specified period of time without the termination of the Oil, Gas and Mineral Lease. Usually 180 days from the completion of one well to the commencement of the next well.
A document that transfers interest from one party to another.
Certified Professional Landman or “CPL” is the highest designation one can receive by the American Association of Professional Landmen (“AAPL”). It requires a four year college degree, several years of working, passing a comprehensive exam and sponsorship by three other CPLs who have knowledge of your work and ethics.
The process of fixing (“Curing”) title issues to make the title marketable.
A conveyance or transfer of property or rights by a legal document that is signed and delivered.
Money paid to the Lessor to defer production or commencement of drilling operations during the Primary Term of the Oil, Gas and Mineral Lease. Paid Yearly, as opposed to a “Paid-Up” Oil & Gas Lease which is paid all at once.
A clause which can be added to an Oil and Gas Lease which releases all depths above or below the specified producing zone or below the Total Depth Drilled at the end of the Primary Term.
A document where the operator or purchaser and the mineral/royalty owner agree on an exact decimal interest in a well or unit.
Legal permission from a state regulatory agency to drill a well
When the well is drilled and completed but does not produce any Oil or Gas.
Burdens on an interest.
Right to execute an Oil, Gas and Mineral Lease.
When an Oil, Gas and Mineral Lease has reached the end of the Primary Term without being drilled or otherwise extended.
Absolute ownership of Real Property – surface, minerals, water, dirt, gravel, etc.
One or more reservoirs in a single area.
Spacing and allowable rules mandated by a governmental authority for wells drilled into a certain reservoir.
A common clause in Oil, Gas and Mineral Lease contracts that frees the Lessee from obligations due to causes such as war, strike, riot, epidemic, hurricanes etc.
A deed where the seller warrants the entire history of the property.
The receiver of property or some other asset.
The giver of property or some other asset.
The total acres in a tract of land.
In an Oil, Gas and Mineral Lease it is usually referred to as the Term Clause. The Primary Term is how long the lessee or his successors have to drill a well (usually 1 to 3 years). The Secondary Term allows the lease to remain active for as long as production in paying quantities is maintained.
A layer of rock with particular characteristics such as sufficient porosity and permeability to form a petroleum reservoir.
A non-vertical well that is drilled directionally.
A well that injects various fluids (water, waste water, brine, etc.) into a reservoir for the purpose of enhanced oil recovery.
The distribution when a person dies without leaving a valid will, the estate will pass by the laws of descent and distribution of the state in which the Real Property is located.
A contract the governs a joint venture between owners for the operation of a concurrently owned tract or leasehold for oil, gas and other minerals.
A clause which can be added to an Oil, Gas and Mineral Lease which releases all lands which aren’t included within a producing unit at the end of the primary term.
How interest is passed when a person dies without a valid probated will. This varies by State and real property will follow the law in the state in which the property is located.
Ownership in an Oil, Gas and Mineral Lease which grants the owner the right to explore, drill and produce. Leasehold Interest owners are obligated to pay all cost of production, and after royalties are paid, are entitled to their share in production proceeds.
The purchaser of an Oil, Gas and Mineral Lease who is entitled to drill and operate wells, paying the lessor a royalty and retaining the remainder.
The owner of mineral rights who grants an Oil, Gas and Mineral Lease and is normally entitled to a percentage on production which is free of most costs of drilling and producing.
The Life Estate is ownership of an asset for the duration of the persons life. The remainderman receives the interest after the death of the Life Estate. Both parties must sign together, or ratify the other to sell or lease. In Louisiana, the Life Estate is called a Usufruct and the Remainderman is called the Naked Owner.
Title to an asset that is accepted without much risk involved.
The total length of the wellbore measured along the actual well path.
The legal description of a parcel of land that is measured in distances, angles and directions.
A legal document that conveys the rights to the minerals while remaining separate from the surface rights.
An estate of ownership of all or a portion of subsurface oil, gas and minerals under a tract of land.
A real property interest created when the oil, gas and minerals is severed from the surface estate. Typically, a mineral interest is created by a conveyance or reservation.
In Louisiana, any severed mineral or royalty interest, whether reserved or granted.
The net acreage owned by a mineral owner of the total gross acres in a given tract of land.
An interest carved out of the Working Interest that is the share of the gross production from the property.
A share of production after all royalty burdens, production payments and similar burdens have been deducted from the working interest.
An interest that lacks the right to execute an Oil, Gas and Mineral Lease but does have a right to share in the bonus consideration, delay rentals as well as royalty under existing or future Oil, Gas and Mineral Leases.
An interest that lacks the right to execute an Oil, Gas and Mineral Lease and share in the bonus consideration or delay rental but does have an expense free interest in the oil, gas and minerals when produced. This interest burdens a Mineral Owner.
A clause in an Oil, Gas and Mineral Lease to protect a tract of land from drainage of oil and gas to an adjoining tract of land that a well is being drilled or is already in production.
An instrument which sets out the terms by which the Lessor grants to the Lessee the right to explore and produce oil, gas and minerals.
A clause that provides the lessees the right to extend the primary term of an Oil, Gas and Mineral Lease by making an additional payment to the lessor prior to the expiration of the primary term.
A percentage on production which is free of cost of drilling and producing and is paid by the Working Interest Owner.
A lease that all bonus consideration has been paid for the entirety of the primary term. No delay rentals.
A deed where two or more parties own an undivided interest in a tract of land but desire to own separate tracts individually i.e. You and your brother own a 100 acre tract and decide to partition it into two 50 acre tracts. The minerals can be remain undivided or separate depending on language and desire.
Refers to a hole punched in the casing or liner of an oil or gas well to connect it to the reservoir.
Any type of property that can be moved i.e. car.
The bringing together of separately owned tracts of land under the provisions of the Oil, Gas and Mineral Leases or some other agreements to form a unit for the drilling of an oil and/or gas well.
A well that was producing in paying quantities, but no longer does. As opposed to Dry Hole, which has never produced.
The initial term of the lease, often expressed in years.
The general administering of a deceased person’s will or the estate of a deceased person without a will.
A well that is producing from a tract of land that is not pooled or unitized.
An agreement between the lessee and lessor as to how production will be shared among leases crossed by a production sharing well.
The amount of acreage around a well for a particular depth or horizon which is determined by governmental authority “field rules” to establish density of wells in the field.
A deed which transfers only that interest in the real property which the grantor actually has, if any at all.
The act of ratifying or giving formal consent to a contract or agreement, making it officially valid.
Fixed property i.e. land and buildings.
A statement in writing filed by the Lessee indicating that an Oil, Gas and Mineral Lease has terminated or has been forfeited by the Lessee. This could pertain to certain lands and/or certain depths.
A subsurface pool of hydrocarbons contained in porous or fractured rock formations.
A term used by mineral and royalty buyers to price a mineral or royalty interest that is subject to an oil and gas lease and being a full lease royalty on an acre of land. It allows for an apple to apple comparison. i.e. If a landowner owns 1 net mineral acre (“nma”) and is leased at a 1/8 royalty then he would have 1 royalty acre (1 nma X 1/8 X 8 = 1 royalty acre). If a landowner owns 1 net mineral acre and is leased at 1/4 royalty then he would have 2 royalty acres ( 1 nma X 1/4 X 8 = 2 royalty acres).
An instrument conveying a right to receive a percentage of the profits from the sale of oil, gas and minerals, if and when they are actually produced. This legal document does not convey any mineral rights, only the right to receive royalties.
Refers to the ownership of a percentage of the production or revenue that is produced.
Well used for the disposal of saltwater that is found. Hydraulic fracturing of shale gas wells can produce saltwater when the oil and gas is brought to the surface.
The subjection of property to an easement.
The document where an individual or entity acquired interest in an asset.
Spacing is dictated by state regulations and specifies density of drilling wells for oil and gas and the legal locations for such wells, which is all based on the area believed to be effectively drained by one well.
The seller only warrants against problems or encumbrances that occurred during his ownership.
A deed where the seller only warrants against problems or encumbrances that occurred during his ownership.
The date the drill bit begins drilling into the ground.
An estate of ownership of the surface of a tract of land.
The distribution when a person dies through a valid and probated will.
An Oil, Gas and Mineral Lease executed by a mineral owner during the Primary Term of a recorded Oil, Gas and Mineral Lease which is to become effective upon the expiration or termination of the current Oil, Gas and Mineral Lease.
An authorization by the owner directing the operator or purchaser to pay another person a share in the oil and/or gas produced.
The vertical distance from the Surface to the deepest depth drilled.
Ownership right to use and possess property that is shared by two or more owners. No individual owner has an exclusive right to any portion of the property.
An agreement for the development and operation for the recovery of oil and gas from a single unit and for the allocation of cost and benefits.
The combination of Oil, Gas and Mineral Leases covering more than one spacing unit which typically covers an entire producing field. Units that are approved by the governmental authorities are intended to be field-wide.
A well that is drilled straight up and down.
The process of making an oil and/or gas well ready for commercial production after drilling operations have ceased.
A legal declaration of a person’s wishes regarding the disposal of his or her property or estate after death.