What exactly is a mineral estate?

The mineral estate under "Mineral Classified Land"; being public free school land and asylum land that was sold by The State of Texas between September 1, 1895 and August 21, 1931 as defined by The Relinquishment Act of 1919, will be discussed in another article.

The owner of land owns the oil, gas and other minerals beneath the land in fee simple.  If ownership of the minerals is severed from the ownership of the surface, two (or more) separate fees simple result.

The ownership of a mineral estate carries with it five essential attributes:

1. the right to develop,
2. the right to lease,
3. the right to receive bonus payments,
4. the right to receive delay rentals,
5. the right to receive royalty payments.

The Right to Develop

This is the right of the owner to develop the minerals, and includes exploration, drilling, producing, transporting, storing, and marketing, and most importantly with a severed mineral estate, the implied right to use the the surface estate in ways reasonably necessary to carry out these operations.  The owner can also authorize other people to carry out any of the various development activities.

Few individual owners have the technical skill and expertise or financial resources to develop the mineral fee themselves, and the right to develop is transferred to an oil and gas company by an "Oil & Gas Lease".  The other four attributes of the mineral fee are rights related to this transfer.

The Right to Lease

This is commonly known as the executive right.  It is the right to assign the mineral fee to another, with all of the rights to develop.  The Right to Lease can be divided into any possible fraction or fractions, and does not require an ownership of any of the other attributes of the mineral estate.  See the Oil & Gas Lease article.

The Right to Receive Bonus

The bonus is consideration paid to the mineral fee owner for transferring the development rights.  It is usually a lump sum paid when the lease is executed, and frequently is a negotiated dollar amount per net mineral acre.

The Right to Delay Rental

Delay rental are payments made for the privilege of deferring drilling.  Some areas of the state it is common, other areas usually use a Paid-Up Lease, which does not require delay rental payments.

The Right to Receive Royalty

Royalty is the right to a stated fraction of production without any deduction for the cost of drilling and operating the well.

Please select the Landowner Request Form, and provide us with your information, and we will contact you to discuss how we can help you.