Natural Gas Mineral Rights: How They Work

by | Dec 9, 2014 | Business


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Holders of property enjoy a broad range of rights, simply by living in the United States. One of these privileges is the access to natural gas mineral rights. Usually a mineral title opinion is the sole paperwork needed to prove evidence of ownership and derive income from the land. Historically, or during the 1700s and 1800s, a land that was deeded to a landowner generally included the mineral estate or mineral rights as well.

Know What to Expect

As you can imagine, a holder of real estate does not really care about the topic of natural gas mineral rights, unless, of course, they receive information from an oil company that is interested in leasing the natural gas mineral rights for their land. That can cause everything to change in an instant. Therefore, to proceed with the process, you need to know the basics of mineral rights leasing to optimize your relationship with the oil company that is interested in leasing the rights to your tract.

The Contents of a Lease

In order to bring gas or oil reserves into the marketplace, a legally binding contract, called an Oil, Gas and Mineral Lease is used. Although it features a number of succinct details, the framework of the document is not complicated in and of itself.

The contract simply states that in exchange for a lease payment, issued upfront, plus a percentage of the royalties, the natural gas mineral rights owner gives the operator the right to implement drilling and production. In some instances, the drilling will not take place and the lease will simply expire. However, if the process does take place, then the operator will typically provide a proposal for drilling, offering to pay for any damages that occur from the surface use of the land.

Drilling Can Take as Much as Three Months or More

Therefore, neither production nor profits can be realized unless there is an agreement between the property owner and the oil company operator. The drilling process, itself, can take from 10 days to three months or more. Production involves equipment installation, hydraulic fracturing . . . the whole nine yards, so to speak – all of which is needed to make the oil well and produce natural gas reserves.

So, as you can see, leasing natural gas mineral rights can be as exciting as it is involved. Know what to expect if you are buying real estate that you believe holds these rights within its tract.

Gas or oil is produced from reservoirs beneath a land’s surface. Therefore, everything about the process can become quite detailed. So, again, if it is your goal to lease your mineral rights or to buy real estate where you can proceed with the process, you need to familiarize yourself with overall drilling procedures to realize a healthy return on your investment.

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