Before you lease your mineral rights, make sure that you know what you have so that you understand what you are giving up. Contrary to popular opinion, not all mineral rights are the same. The value of your rights depends on the location of your land, the location of nearby wells, the production of nearby wells, the presence or absence of immediate drilling plans, the status of the title history to your neighbor’s lots, the stage of regulatory approvals that your drilling unit is in, the type of regulatory approvals that have been requested, the way that the drilling unit lines have been drawn in your area, the ability of the operator who intends to develop the unit, and most importantly the unique history of title to your particular piece of land.
There are two serious consequences of failing to check the facts. First, you could sign a bad lease. You may be able to easily negotiate better terms if you know how much leverage you have. Second, your minerals could be drained without any compensation to you. Yes, you heard that right. Under the Rule of Capture, which is followed in Texas, your minerals can be taken without paying you anything. When Daniel Day-Lewis talks about drinking someone else’s milkshake in the movie There Will Be Blood, he is talking about the Rule of Capture. It is a real law and it can affect you.
You can obtain most, if not all, of the information that you need from three sources: (1) the Texas Railroad Commission, (2) the Texas Comptroller’s Office, and (3) the county deed records for the county that you are in. You may also need to look at records kept by the city of municipal regulations and regulatory proceedings, as well as information from the county appraisal district. A comprehensive guide to all of these sources of information would be too long to fit in a blog post. In brief, what you want to do is start with the websites for the Railroad Commission and the county. You will find a great deal of the information that you need there. You will also want to get yourself a mapping program. There are many professional programs available for purchase, but for the most part, you should be able to accomplish your goals with a free Google Earth download.
If you need help or have questions, feel free to call our office.
Disclaimer: This blog is for informational purposes only. Do not rely on any part of this blog as legal advice. Instead, seek out the advice of a licensed attorney.