Drawing the Line – Mineral Rights versus Surface Rights

 

Landowners in mineral-rich regions of the U.S. might just be lucky enough to find themselves standing on abundant energy resources that are waiting to be tapped into. However, who reaps the benefits of oil and gas extraction all depends upon who owns the mineral rights, which in many instances, isn’t the landowner. If you own land or are contemplating purchasing a plot along a shale play, it’s important that you know just what you own.

Surface Estate vs. Mineral Estate

In the last century, as oil became a primary energy source and more oil companies set about drilling, people began severing their property into two separate estates – the surface estate and the mineral estate. The surface estate is exactly what it sounds like, the surface of the land, including its buildings and the right to use the land for activities like farming. The mineral estate, on the other hand, is the right to oil, gas, and other minerals that are found beneath the earth’s surface. Mineral rights can be extremely valuable if drilled, but oil and gas extraction takes a lot of effort and expensive specialized equipment. In order to cash in on their mineral rights, many landowners sell their mineral rights to oil and gas companies who have the resources to properly explore and drill. This effectively severs property into two different parcels. For current landowners, that means you may not own your property’s mineral rights if rights were severed in the history of the property.

Who Owns What?

The good news is, you can find out whether or not mineral and surface rights are severed and if so, who holds the mineral rights. The county courthouse or local title agent can access all the public records pertaining to the land if you provide an accurate legal description. Following the “chain of title,” an examiner can discover from deeds and liens if the original fee simple ownership was ever severed as a matter of record. If ownership was not severed, you may own some very valuable mineral rights.

Cashing In

As a mineral owner you have some very lucrative options for cashing in on your mineral rights: