Mineral Rights Basics
Understanding your mineral rights ownership, leasing options, and royalty calculations.
What Are Mineral Rights?
Mineral rights represent the ownership of natural resources beneath the surface of a property, including oil, natural gas, and other valuable minerals. These rights can be:
- Owned separately from surface rights
- Bought, sold, or leased independently
- Passed down through generations
- Split among multiple owners
Types of Ownership
Common Ownership Structures
- Fee Simple: Complete ownership of both surface and mineral rights
- Severed Minerals: Mineral rights separated from surface rights
- Fractional Interest: Shared ownership among multiple parties
- Life Estate: Rights held for the duration of someone's life
Leasing Your Mineral Rights
A mineral lease is a contract between the mineral rights owner and a company that wants to develop those minerals. Key components include:
- Bonus Payment: Initial payment for signing the lease
- Primary Term: Initial period during which the lessee must begin development
- Royalty Rate: Percentage of production value paid to the mineral owner
- Shut-in Clause: Provisions for when wells are not producing
Understanding Royalties
Royalty Calculations
Your royalty payment is typically calculated as:
Royalty Payment = Production Volume × Market Price × Royalty Rate × Ownership Interest
Factors affecting your payment:
- Market prices for oil and gas
- Production volumes
- Operating costs (if applicable)
- Taxes and deductions
Rights and Responsibilities
As a mineral rights owner, you have certain rights and responsibilities:
Rights
- Access to production data
- Regular royalty payments
- Audit capabilities
- Property access rights
Responsibilities
- Maintaining accurate records
- Updating contact information
- Tax reporting
- Estate planning
Common Terms and Definitions
- Working Interest
- The right to drill and produce oil and gas, and obligation to pay operating costs.
- Pooling
- Combining multiple tracts of land to form a drilling unit.
- Division Order
- Document specifying how production proceeds are distributed among owners.
- Held By Production (HBP)
- Lease continuation beyond primary term due to ongoing production.
Need More Information?
Our Owner Relations team is here to help you understand your mineral rights and maximize their value.