Mineral rights are ownership rights in minerals below the surface of a property. Minerals include oil, sulfur, natural gas, gold, silver, copper, iron, coal, uranium, and salt under the surface estate of real property. Mineral rights are legally different than surface rights. Minerals under a piece of property can be owned separately from the surface estate and can be owned by multiple people simultaneously. An owner of the mineral estate may grant an oil and gas lease to another party permitting them to develop the minerals. If the mineral rights on the property are owned by a different person, the owner of the minerals can extract resources without the surface rights owner’s permission. This is because the mineral estate is the “dominant estate”. Although the mineral owner does not need the surface owners’ permission to drill on the surface, he is still liable to the surface owner for any damages his actions cause to the surface.
What is royalty interest? Since most mineral owners can not develop minerals on their own, they lease out their mineral estate to someone who can develop the minerals for them. A mineral owner will execute a lease agreement, allowing the working interest owner, developer, or “lessor” to develop the minerals and providing the mineral owner a share of the profits from the mineral production. The mineral rights owner or “lessee’s” cut of the profits from the developed minerals is called a “royalty interest” under a typical lease agreement. A lessor will bare most of the costs associated with developing the minerals, such as the costs of drilling, production, and exploration in exchange for bearing these costs the working interest owner receives the majority interest in the profits from the developing the materials.
Do you have mineral rights, royal interest and/or workers interest? Are you wanting to buy or sell them? Or are you seeking advice? Although these topics can become complicated, having an experienced attorney on your side may moderate the process. Talk to a board-certified real estate attorney to understand what the law provides for you. Our number is 713-572-4900.