A mineral deed or mineral reservation title is generated as proof of sale and recorded at the real property records office in the county where the minerals and surface land are located.

How to determine ownership of mineral rights:

• Read your property deed and research land title records. If you can’t find your deed, it should be on file with the county courthouse.
• If you have to make a trip to the courthouse to research mineral deeds, grants, or reservations, you will need a legal description of your property (found in your deed or title for land).

Many oil and gas companies will determine ownership for you, because mineral research can be very complex.

What should I know about leasing?

Additional questions about leasing 

North Texas Counties
County sites are the place to find information about your property deed to help you see who has ownership of the mineral rights and/or surface land rights. 

• Tarrant County
• Johnson County
• Parker County
• Denton County
• Wise County
• Hood County
• Somervell County

Other counties in the Barnett Shale basin include: Cooke, Montague, Jack, Palo Pinto, Erath, Bosque, Hill, Young, Stephens and Eastland.

Now what?
Once you have confirmed that you own the mineral rights:

• You have the right to refuse to lease the mineral rights or negotiate lease provisions.
• You may receive more than one offer to lease your mineral rights. Multiple offers may come from sources such as the exploration company, an authorized landman who represents the interests of that company, or from speculators who can then sell the rights to another company.

I don’t own the mineral rights to my property. What happens?
If you only own the surface land, you do not have legal claim on any income produced by minerals under your land or the legal right to stop exploration under your property.

New legislation (H.B. No. 630) requires that an operator must notify a surface owner of the issuance of a drilling permit from the Railroad Commission to drill a well on the property within 15 business days therefrom. The operator will then have two years from the issuance of the permit to drill the well or the permit will expire.

Historically, the reasonable use doctrine is applied when surface conflicts arise from the dominant mineral estate. The courts have adopted the accommodation doctrine in certain cases where there are conflicting surface usages between the mineral owner and the surface owner. Whether the accommodation doctrine would apply to your situation is something you should talk to a local attorney about. The Texas Railroad Commission has a helpful article on surface rights at http://www.rrc.state.tx.us/about/SurfaceOwnerInfo.

What should I know about leasing?
There are four legal steps taken by companies to secure mineral rights:

• Mineral ownership is determined.
  Oil and gas companies usually hire people to research mineral titles in order to determine who owns the minerals that they want to develop. In some cases, this work involves researching land and mineral deeds that date back to the 1800s.

• Mineral owners are contacted by the company.
  Once mineral ownership is determined, the company will approach the mineral owner.
  The initial contact may be made by a phone call, a letter, or a home visit from an oil or gas company employee or representative (could be a leasing agent or a landman). At this time, the company will explain its desire to explore for and possibly develop the mineral estate for oil and gas. (Unless the surface owner also owns the minerals, he or she will not be contacted at this stage).

• Negotiations begin on the purchase or lease of mineral rights.
  The most widely utilized method is the negotiation of a mineral lease, not the purchase of minerals. Negotiations may include such issues as royalties, water use, compensation for damages to property, and other considerations. If successfully negotiated, leases can be used to protect surface property. The company requires the lease in order to proceed with their development plans because the lease transfers the right to explore for and develop minerals from the mineral owner to the company.

• Company may contact the drillsite owner (if different from the mineral owner, to be used as a drillsite).
  In many cases, when companies are ready to explore, they are legally required to inform surface owners that they have leased the mineral rights and intend to search for and possibly develop the oil and gas under the drillsite owner’s property. Surface Use Agreements (contracts) or less formal agreements may be negotiated with the drillsite owners at this stage.

What is in a Lease?
The lease agreement contains stipulations including, but not limited to:

• Legal description of the area and the number of acres involved.
• An effective date of the lease agreement and the anniversary date for the lease.
• A statement of the primary term of the lease.
• Lease rentals.
• A royalty clause.
• Payment of royalties.
• Assignment restrictions requiring landowner approval before a lease can be sold to another company.
• Pooling provisions that allow an operator to combine your acreage with adjacent acreage in order to create a pooled unit to drill a well.

What should I do when contacted about leasing?
Before any drilling starts, the company must acquire or lease mineral rights to the gas deposit. Only then can the company initiate drilling operations in search of natural gas.

You will first be contacted by a landman, the company’s contact person in the community, who is either employed or contracted by the oil and gas company.

The landman is responsible for things such as determining mineral ownership and locating the mineral/landowners, negotiating gas leases, and conducting surface inspections before drilling.

The landman may approach you by phone, mail or in person to see if you are interested in leasing your mineral rights.

What should I do after receiving a lease offer?
Tip #1
If an offer is given, make sure it is in writing. Do not sign any contracts or letters without fully understanding the terms of the agreement. You have the right to consult with an attorney or contact a landman before signing any agreement. At this point, you may want to also consult with your neighbors, neighborhood association or organizations that work with landowners.

Tip #2
Educate yourself about your specific situation by asking these questions of the landman:

• Does the company have a permittable drill site in accordance with city requirements?
• Where is the drill site located from your property?
• What are their plans to transport the gas to market?
• How many leases does the company have around you?
• How many rigs do they have available?
• How many wells have they drilled in the city before?

Tip #3
Remember that you are the owner and in control of your minerals. If you feel the landman is less than professional in his or her demeanor, or you believe the landman has used unethical behavior, you may contact the company’s representative if the company is a member of the BSEEC or the American Association of Professional Landmen to report the incident.  AAPL has a Code of Ethics and Standards of Practice to insure that ethical and fair business practices are followed by its members, but AAPL will be able to help only if the landman is a member of that organization.

Also, it is recommended that you document your meetings/phone calls with the landman or have a witness present.

Tip #4
It is important that you check out the company presenting you with a lease to sign:

• Ask whether the company that is leasing the mineral rights is the company that will be drilling and operating the well.
• Inquire about the experience of the company in the Barnett Shale area.
• Ask neighbors or other mineral owners and landowners about their experiences or knowledge of the company. It is important to know who you are dealing with before entering into a lease. You may research the company’s drilling activity in the Barnett Shale through the Railroad Commission of Texas.
• Ask for the contact references of other property owners who have dealt with or who are currently working with a particular company.
• To report any complaints related to the actions of a landman, you may contact the American Association of Professional Landmen, 4100 Fossil Creek Blvd., Fort Worth,Texas 76137. The phone number is 817-847-7700.

REMEMBER: A mineral lease is a contract between the owner of the mineral estate (lessor) and the oil and gas company (lessee). Once you sign the contract, you cannot lease mineral rights to another company until the lease term expires.

Additional Questions about Leasing

How do I find out if I own the minerals under my property?
Many people in Fort Worth own their minerals. Unfortunately, most residential real estate transactions do not specify whether or not you own the minerals. If the contract you signed to purchase your house did not specifically exclude the mineral rights under your property, then they most likely - but not always - were conveyed with the property. The only way to find out for sure if you own your mineral rights is to have a thorough title search done.

Can someone else own the minerals underneath my property?
Yes, it’s possible that the mineral ownership may be different than surface ownership. A deed/title search may be necessary to determine who actually owns the minerals under a piece of property.

What if many of my neighbors sign a lease but I choose not to sign?
No one can be forced to sign a mineral lease. If you choose not to lease your mineral rights, the Texas Railroad Commission (RRC) rules require that the “point of perforation” in the wellbore be at least 330 feet from your property line, unless a special exception to the Railroad Commission rules is granted.

Current technology permits the operator to precisely place the wellbore, and RRC rules also require a third-party surveyor to confirm the exact location of the wellbore after drilling. Of course, if you choose not to lease your minerals, you do not receive a signing bonus or participate in the monthly royalties that will go to your neighbors. If you chose not to lease, a well may still be drilled underneath the neighborhood if the operator has assembled sufficient leases to create a unit in order to drill a well located in a manner satisfying all field rules (or receives an exception to same) and drilling ordinances.

What is the difference between leasing and selling my mineral rights?
If you lease your mineral rights, you are giving a lessee the temporary right to explore for oil and gas for the term of the lease. If the lessee successfully finds oil and gas, the rights to the production continue as long as the lease is deemed producing according to the terms of the lease. Upon commencement of production, you will receive periodic royalties until production ceases. This is normally monthly, except that in texas, gas producer are not required to issue checks for less than $100 unless the mineral owner requests otherwise. Once production ceases, the lease will expire and all rights will revert to the mineral owner.

If you enter into a deed to sell your minerals, you will receive one payment upon execution of the document. All further revenues, including bonuses and royalties, will be paid to the purchaser because you no longer own those minerals. If you intend to lease your minerals, read the documents carefully to be sure you are signing a lease and not an agreement to sell.

The safest approach is to call the operator or lease-broker to find out what is included in the mineral lease. You may wish to consult an oil and gas attorney to review the documents.

What is the difference between a signing bonus and a royalty check?
The signing bonus is the “up-front money” typically paid to the owner when the lease agreement is signed. The royalty payment is the stated percentage share of production, or the value derived from production, attributable to the leased property.

How much bonus will I get paid?
Bonus is usually paid on a per-acre basis. Therefore, if you own a lot less than an acre, the per-acre bonus will be proportionately reduced to the fractional amount of an acre that you own. For instance, if your lot is ¼ of an acre and the bonus is $1,000 per acre, you would multiply the $1,000 by 0.25, which is how much you own (1/4 acre): 1000 x 0.25 = 250. So your signing bonus would be $250 if you owned ¼ of an acre.

How can I compare my lease offer to other leases?
You may search county records for leases recorded by lessees to obtain some information. Companies may record only memorandums of leases limiting the information available to the public. Also, bonus payments are not recorded.

Tarrant County does provide a Web site called “Official Public Records – Search” that can be searched by lessor (minerals owner) or lessee (company name). The information provided shows how many leases the company has executed in Tarrant County, when they were filed and their location.

Keep in mind that some companies have affiliate lease-broker companies that also execute leases on their behalf, so a complete understanding of a company’s activity has to include their affiliates. Also, a company may be active in other counties in the Barnett Shale and those counties may or may not have similar Web sites that may be accessed.

When will I get paid?
Typically a bonus is paid within 30 days of when the mineral lease is signed. If your property is included in a producing unit, the royalty is usually paid monthly, (subject to the $100 minimum payment). Payments commence after you have signed a Division Order and the well or wells are completed and the natural gas is produced and sold. (Some companies may vary on when royalty checks are paid, so it is always beneficial to ask the operator of your well about the payment timeline.)

The first royalty check may not be received for months after the well is drilled and fractured.  This is because it may take months to hook up the well to a natural gas pipeline to transport the gas to market.  Also, there may be a lag in processing the leases internally due to the large number of leases gas companies are dealing with in the Barnett Shale.  If gas is being sold and there is a delay in processing the first payment, the first check will contain all past royalties that have not been paid.  As a result, the first royalty check may be higher than subsequent checks.

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