Mineral Owner FAQ
In this section, we attempt to address some of the more frequent questions we get from both surface and mineral owners.
If your question is not addressed below, please feel free to contact us for more information.
WHAT ARE THE DIFFERENCES BETWEEN MINERAL AND SURFACE ESTATES?
Under Texas law, land ownership includes two distinct sets of rights, or “estates,” the surface estate and the mineral estate. Initially, these two estates were owned by the same person and they may continue to be owned by one person. However, in many areas of Texas, especially those where there has been extensive oil and gas development, it is common for the mineral estate and surface estate to be owned by different people.
The division, or “severance,” of the mineral estate and surface estate occurs when an owner sells the surface and retains all or part of the minerals (or, less commonly, an owner sells the minerals and retains the surface). If an owner does not expressly retain the minerals when selling the surface, the mineral estate he owns is automatically included in the sale.
Regardless of whether the mineral estate and surface estate are held by one owner or have been severed, Texas law holds that the mineral estate is dominant. This means that the owner of the mineral estate has the right to use the surface estate to the extent reasonably necessary for the exploration, development, and production of the oil and gas under the property.
WHAT IS INTESTATE SUCCESSION (DEATH WITHOUT A WILL)?
Surveys reveal that 60-75% of all Americans die intestate (without a will). This causes the decedent’s property to pass to those individuals whom the State Government believes the decedent would have wanted to receive the property upon his or her death.
Without a will, Texas State Law determines who can claim an interest in a decedent’s estate. See Intestate Succession Texas Law for a graphic that shows how property passes under Texas Laws of Descent and Distribution.
WHAT IS A LANDMAN?
Landmen constitute the business side of the oil and gas exploration and production team. Landmen are the people who determine the surface and mineral ownership of tracts of land in an area that is geologically attractive to an oil and gas company. They do this through a search of the Official Public Records in the County Clerk’s office where they compile a historical “chain of title” to each individual tract.
Once ownership is determined, landmen locate the owners of the mineral estate and negotiate oil and gas leases.
WHAT HAPPENS AFTER I SIGN MY LEASE?
After a sufficient amount of land is leased, geologists, geophysicists and petroleum engineers will select a location for a test well. A test well is an exploratory well drilled to determine whether a particular horizon will produce oil or gas in commercial quantities. It may be necessary to shoot seismic to refine the exact location for this test well and any potential subsequent well.
If the test well is a dry hole or shows minimal production capability, it will be plugged and abandoned. Depending on a variety of geologic and economic factors, the company may elect to drill another well or it may move to a different area. If no other drilling activity commences before the expiration of the primary term, your lease may simply expire and you will be free to lease your minerals again.
If the test well looks promising, production pipe will be run and a completion attempt will be made. After testing potentially productive horizons, the well may be completed as an oil or gas “producer”.
