OIL & GAS INHERITANCE
Land in Texas has two parts or estates, the surface estate and the mineral estate. In states where there is a lot of activity concerning minerals, like Texas, the two estates are usually severed so that one person owns the surface and one owns the minerals. This is typically done when the land is sold and the seller sells the surface but retains the minerals. Over time, the two estates are sold or passed by inheritance so that the surface owner, who may be on the land everyday and may live there, knows nothing about the mineral owner who may be a corporation or a person who lives out of state.
If the minerals are being extracted from the land either by drilling or by digging, the mineral owner is paid for this extraction not the surface owner. If there is no production but an oil company wants to search for oil or gas, he contracts with the mineral owner, not the surface owner. The contract that is usually signed is an oil & gas lease. Some unscrupulous landmen might try to get the mineral owner to sign a mineral deed rather than an oil and gas lease. A mineral deed should not be signed without discussing it with an oil & gas attorney because it conveys all the minerals. it is not a lease of the minerals. A producing oil lease or gas lease will pay the mineral owner royalties. A royalty payment may be large or small. I have written a mineral-interest overview in Texas here. It explains royalty interest.
Because land has these two estates, they pass on inheritance just like any other property. If the two estates have not be severed and a will says something like “I give my land to my son,” the son inherits the surface and the minerals. If the minerals have been severed and a will uses the same language, only the surface is transferred to the son since the minerals belong to someone else. In many cases, it is difficult to know who owns the minerals. Let’s say that a man sold some land in the 1920s but retained the minerals. When he died, he didn’t have a will. If he had a number of children and they have lived and died and had children, etc., the mineral owners may be scattered all over the country. It takes a lot of work to get a court to determine who owns the minerals and what part they own. When a new oil or gas field is discovered, there is much activity trying to determine who to get an oil & gas lease from. Some people are surprised to learn that they own a mineral interest. However the interest may be so small that the royalty payment may be less than $100 dollars a year. On the other hand, the royalty payments may be thousands per month.
If you are contacted by someone who wants you to sign documents who claims that you may own a mineral interest, you should have your own attorney advise you and not rely on what you are told by the person who contacted you or the documents he asks you to sign.
