Texas Oil & Gas Law: Your Rights as a Landowner, Pt. 2

Understanding mineral rights it important, especially when operating under Texas' oil and gas laws. These rights can affect the way land is used, drilling operations are organized, and much more.

When a property is deemed valuable for its mineral content, there can be some conflict over who owns what part of the land. Surface ownership refers to the surface of an estate, excluding anything below the grounds. Mineral rights refer to the ground below the surface that is rich in minerals, such as crude oil.

An individual who owns the property may have surface ownership and mineral rights, or in some cases, only the surface ownership. For this reason, it is important to determine what type of ownership and rights you have before your property is swept out from underneath you. Furthermore, if you own mineral rights, it is important to know how to exercise these rights in an effect and legal way.

Leasing vs. Selling Mineral Rights: What should you do?

When it comes to deciding whether to sell or lease your mineral rights, there are many factors to consider. So long as you haven't given the mineral rights to someone else when you originally bought your property (or inherited it), you retain ownership of them.

You have two options when deciding to work with companies:

  • Sell your mineral rights: You will still maintain ownership and have power to make decisions in the future. This also gives the opportunity to gain more revenue in the future. You will also get royalty payments so long as production is continued on your land.
  • Lease your mineral rights: You don't own your mineral rights any longer, but you do get paid upfront and risk less. Even if the oil company cannot develop your land, you will get the money agreed upon.

If you decide to lease your land and production is not good or the company decides they don't see production as profitable any more, you could lose out on a good sum of money. Comparatively, if you choose to sell upfront, you may make less money than you could by leasing your property. Both involve some risk and should be discussed with a Houston oil and gas attorney from Herring Law Firm prior to making any definitive decisions.

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