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Types of Mineral Interests

 

There are a number of different types of mineral interests you may encounter.  These include:

A True Mineral interest

In Texas, the mineral interest includes a number of rights which have been referred to in Texas case law as a “bundle of sticks”.

These rights include:

  • the executive right (the right to negotiate a lease);
  • the right of ingress and egress on the surface (to explore for oil and gas);
  • the right to receive bonus payments;
  • the right to receive delay rentals; and
  • the right to receive royalties.

Royalty interest - A share of production, or the value or proceeds of production, free of the costs of production, when and if there is production.  This is usually expressed as a fraction.  (Of course, other terms of a mineral lease can require the owner to pay part of the production costs.)

Non-participating royalty interest - merely the right to receive royalties.  This owner has no ability to negotiate a lease.  

Term royalty interest - A royalty that pays the owner for a certain number of years.  

Overriding royalty interest—A royalty interest carved out by a lessee when a lease is assigned to a new operator.  These can be owned by companies or individuals.  These are often given to landmen as part of their compensation.  This expires when the lease expires due to lack of production.

Working interest - This interest carries liability with it, as the mineral owner has a part in drilling and operating the well.

It is imperative that you find an oil and gas attorney licensed in the state in which the mineral interest lies to advise you of your rights and options. 

Recommended Reading
 

Mineral Lease Process

Mineral Lease Process
by Leslie Henges Dolliver

 
Fractionalization
Fractionalization

by Leslie Henges Dolliver
 
Oil and Gas Law in a Nutshell
Oil and Gas Law in a Nutshell
by John S. Lowe
 
Look Before You Lease
Look Before You Lease
by Jim Stafford