Recognizing that laws vary from State to State, we have a situation where there is a minimum area required in order to lease your rights to the minerals. Basically, someone with a small tract in a quarter section sort of gets ignored. If one party owns the remainder of the quarter section, for example, they pretty much get paid for yours, too. I assume this has something to do with the rules that apply to how the oil and gas business works. Say the oil company must have the entire quarter section leased in order to drill, then the owner of a little piece who refused to lease could then deny the owner(s) of the remainder to be able to lease their land. For natural gas, I think they must have the entire section leased. I'm no expert, but, I think this is how it works here.
In the case like that described where hundreds or thousands of lots have been created, no oil or gas company would attempt to negotiate with so many people if they must have 100 percent agreement. Leaving it as a single unit makes sense.
Small holdouts can get forced in. That's how it works in my state.
The worst part of separating the minerals from the surface is the mineral estate controls. If you don't own the minerals they can use the surface to get to the minerals. Both my family and the wife's family own mineral rights to land we don't own the surface. So far no oil but we did get a really good lease a few years back, since expired.
Recognizing that laws vary from State to State, we have a situation where there is a minimum area required in order to lease your rights to the minerals. Basically, someone with a small tract in a quarter section sort of gets ignored. If one party owns the remainder of the quarter section, for example, they pretty much get paid for yours, too
Never heard that one!!! I've done all kinds of private mineral surveys (not federal mineral surveys) to determine small acreage estates. Now that they are horizontal drilling they are drilling under towns and each lot owner gets a percentage. Haven't done one of those for a whole town but I have got involved with some subdivisions adjacent to towns, I suspect they may be doing the town ones incorrectly. It's complicated because dedicated streets don't transfer minerals to the public. So you have to figure out reversionary rights to get the payments correct.
Out here much of the land is made up of split estates. Whole counties are basically private lands with federal minerals underneath. Those are the people I really feel for because they get trampled by the government and even though they own the land the government can supersede the surface rights.
It is really rude to reserve the minerals on a subdivision lot and few people would notice the blurb at the end of the deed doing it. I would but, then I'm more in tune with the issue. Many ranchers and property owners in this part of the world would jump right on something like that, but a regular guy not understanding the issue would probably sign away the estate.
Kind of funny that the article said the state isn't informing the public to the issue. Really? The state should push it's way into private business contracts when one two parties are making a contract that happens every day. Might be rude but hardly illegal.
The uneducated home buyer. Here in LA it was breed into use about getting/holding your mineral rights. No matter how small the tract.
Working the N.LA shale plays, we would regularly run into home/property owners (some on large 20+ ac tracts) that did not have the minerals under their property. These were the most angry ones b/c they were getting nothing.
Private Surface-Federal Minerals
Here's a BLM blurb on the subject:
About 58 MILLION acres of Private/State Surface & Federal Minerals!
Of course there is (and always has been) many Private/Private-Surface/Mineral severances as well.
I have seen Patented Lode Claims that have 2 (or more) Surface owners, and 5 (or more) "subsurface" Mineral owners, usually "split" by depth (range) and/or "vein ID."
There is also a LOT of Mineral Rights that are SPLIT by Mineral Type.(eg. Coal to Brown, Oil/Gas to Smith, Gold/Silver to Jones...etc.).
It can be a real nightmare!
Loyal
And don't forget...
Extralateral Rights!
Not applied very often these days, BUT still a real concern in some cases.
Loyal
Nightmare?
Then there is the poor mineral surveyor acting on behalf of the mineral estate holder. It's interesting....the one's who own the surface and have been informed or know the law can't stop you in crossing the surface...the one's that are the first rodeo ers try to stop you (some with firearms in possession) :excruciating: and the expression on their face when I show back up with the sheriff and client land man.
Pablo B-)
Nightmare?
BTDT, except didn't need the sheriff.
B-)
Our area was almost all just little stripper wells that produced just enough to keep crazy oil people interested. For many years the going rate for an oil lease was $1 per acre. Starting maybe ten years ago the production of natural gas from shale hit the area. Initial offers were around $8 per acre. People thought they were getting rich. Then some wells came in that were making huge amounts of money. People started getting greedy in a hurry. Too late. The economy went south and the price for natural gas plummetted. I purchased a 40 acre tract a few years ago that gets one-fourth of the money from a well on that quarter section. Woohoo! This month's check was $54. At tax time, almost all of that $54 will be paid out in taxes because we get taxed on much more than the $54. The $54 is all that is left after they subtract out various transport expenses from the amount that we supposedly are due. Paying taxes on income we never saw! Crazy!
I will not lease any of my ground. The return is so minimal that it is not worth the hassle of having people traipsing all over your property routinely and leaving gates open and digging huge ruts at times.
I have just over 5 acres in one section. There are gas wells in each quarter and a major transportation pipe line cutting across my area, but, missing my property. The company has never contacted me. Apparently they do not have to.
This month's check was $54. At tax time, almost all of that $54 will be paid out in taxes because we get taxed on much more than the $54.
There are a couple of ways to lease gas. You sound like you have a lease that has a possible large payout if the price goes up, and a not much or a minus payout when the price is low because you share in the costs. The other type has a smaller payout when the price is high but less risk.
I would not lease the first type of lease. If you don't lease you can be force pooled and thrown into it even though you don't want to.
So I would lease, but do the less risky one and hire someone that understands how it works or educate yourself to the point that you can make an informed decision. I've been involved with family leasing since the 70's and understand it pretty well, but I still have an attorney (one I trust and that knows O&G issues)look over everything.
Few years back, wife's family got $400 per acre for 5 year lease. Nice check, would have been better if they had drilled and hit oil, but they didn't.
The trick is to find the company that is serious about drilling before signing up for a lease. Not that I'm any good at figuring it out 😉
On the good side is that you can basically sell your ranch every three or five years and still have it and the end of the lease.