7 Things You Should Know About Selling Mineral Rights

If you’re considering selling your mineral rights, there are some things to consider first. Do you know what it is you are selling and what it means to sell those rights? It’s a good idea to consult a knowledgeable adviser or attorney before you sign anything and to educate yourself about your rights and your minerals. Here are a few things you should know:

1. Know your Minerals

Mineral rights grant the right to extract minerals from the earth, but the term “mineral” can include oil, natural gas, coal, gold, copper, iron, metal ore, stone, gravel, sand and clay. According to InGauge Minerals, a company that provides software for managing mineral interests, Texas is best known for its oil and gas production. In fact, with mineral-rich areas like the Permian Basin and Eagle Ford Shale, Texas makes a name for itself as the nation’s biggest producer of oil and natural gas. If you live in Texas, you just may be sitting on oil and gas minerals, but there could be other minerals under your surface property. Go here to find out more about common minerals in your area.

2. Know What You Own

Do you own all the mineral rights? What does your deed say? Most mineral rights “run with the land” so it’s probable if your deed says “fee simple” that you own the mineral rights. However, if the legal description also says “less and except” or “subject to” you might not. Consider hiring a title examiner to verify the rights are yours to sell.

In some cases, the mineral rights may already be severed from the surface rights. Make sure you understand what you own.
In some cases, the mineral rights may already be severed from the surface rights. Make sure you understand what you own.

3. Know What You’re Selling

Minerals aren’t owned until they’re brought to the surface. You’re selling the right to access and bring up those minerals. Your contract might specify a lease which could expire, or you might sell outright. You could get a lump sum, or be paid as the minerals are extracted. Educate yourself on the various options and keep in mind these aspects of mineral rights:

  • Right to reasonable access across the surface
  • Right to convey rights
  • Right to renew, extend, or expand rights
  • Right to bonus considerations or delay rentals
  • Right to royalties

4. Know Your Surface Rights

After the sale, you retain “surface rights” which is what it sounds like. You still own the surface of the property but the right to minerals underneath now belongs to someone else. By law, surface rights are “subservient” to mineral rights, which means the mineral rights owner gets priority consideration. State laws provide basic protections, but you may want to include additional protection in your contract.

5. Know What to Watch For

Unfortunately, there are a few unscrupulous companies out there too. Don’t just accept the first offer you get. If it seems too good to be true, maybe it is. Pay attention to fine print and consult your attorney before signing contracts or cashing checks.

6. Know What It’s Worth

Market value determines the value of mineral rights. Learn what nearby mineral rights sold for and seek additional bids on yours. Factors influencing value include:

  • Size of property/acreage
  • Size of mineral deposits
  • Producing or non-producing mines/wells in the area
  • Current commodity prices
  • Current and future exploration
Understand that drilling on your land may have unintended environmental consequences.
Understand that drilling on your land may have unintended environmental consequences.

7. Know Your Limits

Selling mineral rights can mean a lot of money, but that’s not the only consideration. What’s the environmental impact of the extraction methods? If the property is your residence; what noises will you be living next to? Do you like the ethics of the company you’re doing business with? Consult with lawyers and experts, and take time during negotiations to learn all the details before the deal is final.

[This article is for informational purposes only and is not intended as legal advice.]



9 Fast Facts About the Permian Basin

The Permian Basin is a vast area covering West Texas and Southeastern New Mexico that has been known for decades as a region dripping with oil and gas reserves. Today, the Basin continues to produce, even as companies in other major shale regions fold under the pressures of low oil & gas prices. Here are 9 fast facts to familiarize yourself with the Permian Basin:

1. It’s Older Than Its Namesake

Though named after the Permian Period, the Permian Basin got its start as many as 1.3 billion years ago as tectonic shifts started molding the West Texas landscape into what it is today. During the Permian Period, seas teaming with flora and fauna covered the area’s basins. Later, these oceans would dry up, leaving behind the organic matter that would later turn into rich petroleum deposits.


2. It’s Huge

The Permian Basin stretches approximately 250 miles wide by 300 miles long, covering dozens of counties in Texas and New Mexico. One of the ten largest shale plays in the U.S., the Permian Basin produces a whopping 5 billion cubic feet of gas per day, plus 1.3 million barrels of oil per day.

3. Permian Rocks Were Discovered in 1858

Benjamin F. Shumard, a doctor turned paleontologist, was appointed Texas’ Chief Geologist in 1858. In his new position, he organized the first Survey of Texas, which included exploration of the Permian Basin area of West Texas, and subsequently, the discovery of Permian-aged rocks. Along with his brother George, and four other assistants, Shumard carried specimens by wagon from the Permian Basin to St. Louis. Unfortunately, these original samples were later destroyed in a fire.

4. It Isn’t Just Filled with Oil & Gas

The Permian Basin also holds large reserves of potash, salts that contain potassium in water-soluble form. Used in textile bleaching, glass making, and soap making, potash is most commonly used for manufacturing fertilizer. Most of the potash deposits along the Permian Basin lie in Southeastern New Mexico, in the Carlsbad Mining District. These commercial deposits contribute to New Mexico’s role as the #1 producer of potash in the United States.


5. First Commercially Drilled in 1920

On the surface, the Permian Area was covered in grasslands, which were inviting to farmers and ranchers who settled the area. In order to have adequate water supply for crops and livestock, landowners will drill for water, often discovering oil and gas along the way. In 1920, a discovery well was drilled in the Westbrook field of Mitchell County in West Texas. This well was successfully drilled to a depth of 2,498 feet, proving that oil and gas production from the Permian strata was viable.

6. Deep Drilling Came Later

Lack of infrastructure to move oil and gas to distant markets prevented deep drilling early on in the Permian Basin’s production. In 1928, a deep test at Big Lake oil field revealed ample resources at a depth of more than 8000 feet. Still, petroleum companies continued drilling at more economically feasible depths until the appropriate technology came along.

7. It Got Us Through World War II

Some attribute production from the Permian Basin to the Allied victory during World War II. At the time, the Permian Basin was responsible for half of the world’s oil and gas production, helping fuel the tanks, jeeps, ships, and planes the Allies used to win the war.

8. Fracking Has Been Instrumental to Deep Drilling

Over the past decade, drilling activity has boomed along the Permian Basin as hydraulic fracturing has enabled drillers to extract oil and gas from previously unreachable depths. Though a controversial practice, fracking has been key to unlocking deep drilling, greatly boosting local economies. Local land owners can lease or sell mineral rights to companies like Caddo Minerals for a hefty sum, while the area as a whole benefits from increased sales tax revenues and more job opportunities.


9. It’s Been More Resilient in the Oil & Gas Downturn

In 2015, as oil and gas prices and stocks plummeted, things continued looking up for producers in the Permian Basin. The Wall Street Journal cites prolific wells and low costs as the reasons the Basin remains a viable area for production, when production in other shale plays has slowed to a trickle. Despite prices hovering around $40/barrel, companies like Pro Petro have been able to stay alive in a down market, thanks to their hefty investment in the Permian Basin.



Shale Drilling in Texas

Shale Drilling in Texas

Concern for climate change has made the world take a look at our dependence on oil and the fragile relationship we have with the environment.  The increases in greenhouses gases and carbon emissions have forced government, environmentalists and energy companies to search for alternatives that allow them to meet energy demands while trying to limit damage to the planet.

The Natural Gas Alternative

Natural gas extraction has emerged as one of the options for a sustainable and renewable energy source.  Environmental advocates and even oil industry experts have agreed that if you compare gas with coal natural gas cuts the carbon foot print by as much as 80% under the right conditions.  Natural gas can also be used to generate electricity, run your car, heat your house and cook your food.

Texas is listed as one of the major “plays” along with Mississippi, New Mexico, Arkansas, West Virginia, Kentucky and Pennsylvania.  A “play” simply means it is a location with potentially large reserves.  Oil and gas industry in the state of Texas remains the biggest in the entire US.

The geological history of Texas shows that 65 million years ago Texas was covered by a shallow sea, this created a sedimentary rock that had a high organic content.  Over time, 65 million years of time, this organic material was pressurized and cooked which produces a particular chemical formation.  In Texas this formation that produces natural gas is called the Eagle Ford Shale.

There are other types of shale spread across the country, here are some examples:

Fayetteville Shale

Spread across central and northern Arkansas, this deposit is more than 300 million years old. The shale, made from a sedimentary deposit is more than 6000 feet deep

Marcellus Shale

The shale is named so because of its nearness the town of Marcellus, New York the shale remains largely untapped.  This deposit is more than 400 million years old and there is lots of interest in the deposit because it is so close to energy consumers along the East Coast.

Haynesville Shale

Another large rock formation that can be found in Texas, along the border it shares with Louisiana.  Geologists believe that these deposits started during the Jurassic Age roughly 170 million years ago.

Barnett Shale

This shale covers more than 17 counties in Texas and 6000 square miles it is considers the be the biggest oil reserve in the entire United States.  This geological formation goes back more than 300 million years.

Shale drilling happens all across Texas, but did you ever wonder exactly how they got it out of the ground?  Here is a video with a 3D rendering showing you exactly how it is done.