We are looking at purchasing a piece of property where the owner wants to keep all the mineral rights. As the new owner, what rights do we have in protecting the property in drilling operations from occuring next to the house in future leases? The owner has a current lease and we are bond to it but once it expires what rights do we have as surface owners? I do not think that we can have executive rights to future lease agreements without owning mineral interests in it. Thanks for any advice ahead of time!
Tony:
Usually, if a well is planned, the surface owner will be contacted by a representative of the oil company and an agreement will be written addressing how any surface damages will be handled. This document, is referred to as a "Surface Use Agreement" or "Easement Document". Normal surface damages include the building of roads to a location and the building of a location which includes clearing of a surface area and digging of pits. This agreement could also include damages incurred by seismic tests. Keep in mind, with today's drilling technology, many wells are horizontal or directional and access to the minerals is drilled from an adjacent location where no physical presence is required on your surface area. If or when a well is planned and an agreement is presented, you might want an experienced individual to review the wording in order to make certain all areas are covered.
That is an elaborate answer, but I don't think that it cuts to the chase. Probably the best and most responsive reply to your question is no. There is nothing that you can typically do in Texas to prevent a mineral owner from executing an oil and gas lease if you do not own the minerals. (Or in turn keeping the rig off your land) The reason is that the mineral estate is considered to be the "dominant" estate. There is also nothing incorrect in Mallory's reply.
Be advised also that there are a ton of court cases in Texas that require the intrusion by the oil company that drills the well to be reasonable. Many land owners have filed lawsuits that have alleged the use by companies to be unreasonable or a nuisance. Sometimes they win, sometimes they lose. In conclusion, the ball is actually in your court. You don't have to close on the land if this issue concerns you so much.
Dave:
My question to some degree goes along with this initial post; but, more specific to one issue. I'm in Texas and my question is about Executive Rights only. If a person retains 50% of the mineral rights and sells his/her property along with the remaining 50% of the mineral rights as well as giving the new surface owner "Executive Rights", what rights go with the Executive Rights here. Nothing else is mentioned in the deed. Does the new owner with Executive Rights negotiate the lease for both parties and then does the new owner with 50% and the original owner with 50% share equally the bonus as well as the negotiated royalties?
I may have been a little windy here; but, a landman that is supposed to know what he is doing told me something about Executive Rights that was much different than I was led to believe by my attorney and for that matter what I believe to be common sense, if there is such a thing when talking about oil leases.
Thanks for all you good input and help!
Dave Quincy said:
That is an elaborate answer, but I don't think that it cuts to the chase. Probably the best and most responsive reply to your question is no. There is nothing that you can typically do in Texas to prevent a mineral owner from executing an oil and gas lease if you do not own the minerals. (Or in turn keeping the rig off your land) The reason is that the mineral estate is considered to be the "dominant" estate. There is also nothing incorrect in Mallory's reply.
Be advised also that there are a ton of court cases in Texas that require the intrusion by the oil company that drills the well to be reasonable. Many land owners have filed lawsuits that have alleged the use by companies to be unreasonable or a nuisance. Sometimes they win, sometimes they lose. In conclusion, the ball is actually in your court. You don't have to close on the land if this issue concerns you so much.
Bigfoot said:
Dave:
My question to some degree goes along with this initial post; but, more specific to one issue. I'm in Texas and my question is about Executive Rights only. If a person retains 50% of the mineral rights and sells his/her property along with the remaining 50% of the mineral rights as well as giving the new surface owner "Executive Rights", what rights go with the Executive Rights here. Nothing else is mentioned in the deed. Does the new owner with Executive Rights negotiate the lease for both parties and then does the new owner with 50% and the original owner with 50% share equally the bonus as well as the negotiated royalties?
I may have been a little windy here; but, a landman that is supposed to know what he is doing told me something about Executive Rights that was much different than I was led to believe by my attorney and for that matter what I believe to be common sense, if there is such a thing when talking about oil leases.
Thanks for all you good input and help!
Dave Quincy said:That is an elaborate answer, but I don't think that it cuts to the chase. Probably the best and most responsive reply to your question is no. There is nothing that you can typically do in Texas to prevent a mineral owner from executing an oil and gas lease if you do not own the minerals. (Or in turn keeping the rig off your land) The reason is that the mineral estate is considered to be the "dominant" estate. There is also nothing incorrect in Mallory's reply.
Be advised also that there are a ton of court cases in Texas that require the intrusion by the oil company that drills the well to be reasonable. Many land owners have filed lawsuits that have alleged the use by companies to be unreasonable or a nuisance. Sometimes they win, sometimes they lose. In conclusion, the ball is actually in your court. You don't have to close on the land if this issue concerns you so much.
Thanks for the information guys. From doing some additional investigation of my own it seems as though if I do not get any mineral rights from the purchase of this land, I get no say so in what happens about any drilling set backs, etc. that occur in the future. I see how a land owner's desires can be put in jeopardy.
I'm not sure what you were told. I guess you already know that the executive rights owner is the only one who needs to negotiate and sign the lease. Usually the issues that you address are spelled out in a deed that was drafted by someone who knows what they are doing. A good draftsman does not leave anything to chance or speculation, or subjective interpretation by the title searcher. My take on the facts as you present them is that the non-executive owner could argue that the executive owner should have to pay him for one-half of the bonus if not already split by the landman. I think that one-half of the royalties is a given.
Bigfoot said:
Dave:
My question to some degree goes along with this initial post; but, more specific to one issue. I'm in Texas and my question is about Executive Rights only. If a person retains 50% of the mineral rights and sells his/her property along with the remaining 50% of the mineral rights as well as giving the new surface owner "Executive Rights", what rights go with the Executive Rights here. Nothing else is mentioned in the deed. Does the new owner with Executive Rights negotiate the lease for both parties and then does the new owner with 50% and the original owner with 50% share equally the bonus as well as the negotiated royalties?
I may have been a little windy here; but, a landman that is supposed to know what he is doing told me something about Executive Rights that was much different than I was led to believe by my attorney and for that matter what I believe to be common sense, if there is such a thing when talking about oil leases.
Thanks for all you good input and help!
Dave Quincy said:That is an elaborate answer, but I don't think that it cuts to the chase. Probably the best and most responsive reply to your question is no. There is nothing that you can typically do in Texas to prevent a mineral owner from executing an oil and gas lease if you do not own the minerals. (Or in turn keeping the rig off your land) The reason is that the mineral estate is considered to be the "dominant" estate. There is also nothing incorrect in Mallory's reply.
Be advised also that there are a ton of court cases in Texas that require the intrusion by the oil company that drills the well to be reasonable. Many land owners have filed lawsuits that have alleged the use by companies to be unreasonable or a nuisance. Sometimes they win, sometimes they lose. In conclusion, the ball is actually in your court. You don't have to close on the land if this issue concerns you so much.
For the most part, that is true. There have been more than one case where a land owner has said, "There ain't no f***in oil company gonna drill on my land." They then stand in front of the gate with a shotgun or maybe an AK-47. When that happens, the trucks turn around. However, the oil company will then get an injunction that is served by the local sheriff with some possible back-up. At that point, the landowner has to throw in the towel, and allow the drilling to commence. This assumes that a valid lease is in effect.
tony b. said:
Thanks for the information guys. From doing some additional investigation of my own it seems as though if I do not get any mineral rights from the purchase of this land, I get no say so in what happens about any drilling set backs, etc. that occur in the future. I see how a land owner's desires can be put in jeopardy.
Dave:
Thanks for your reply and yes I should have done a better job of spelling out what I was told; but, I just wanted to leave the question open and see what your answer would be. The Executive Rights issue has been the furthest thing from my mind since I thought I totally understood it, then a landman came a courting trying to lease some of my property and we got to talking about one of the people in a group of landowners (neighbors) that I am working with. They actually have the scenario I quoted above. 50%/50% and Executive Rights, nothing else related to minerals in the deed. My understanding was that the new owner with Executive Rights would negotiate the lease; but, each would get their share of the bonus as well as the royalties. When discussing this with the landman, he said that I was not correct, that the person with the Executive Rights would get all the bonus money; but, would have to share the royalties, end of discussion. I questioned him; but, didn't put up an argument. Just figured that I would address this issue as a better understanding became necessary. Then I saw this post today and thought that this might be a great issue for everyone to see and all the while get me straight.
Thanks again for all your help and understanding.
Dave Quincy said:
For the most part, that is true. There have been more than one case where a land owner has said, "There ain't no f***in oil company gonna drill on my land." They then stand in front of the gate with a shotgun or maybe an AK-47. When that happens, the trucks turn around. However, the oil company will then get an injunction that is served by the local sheriff with some possible back-up. At that point, the landowner has to throw in the towel, and allow the drilling to commence. This assumes that a valid lease is in effect.
tony b. said:Thanks for the information guys. From doing some additional investigation of my own it seems as though if I do not get any mineral rights from the purchase of this land, I get no say so in what happens about any drilling set backs, etc. that occur in the future. I see how a land owner's desires can be put in jeopardy.
I was referring to the deed itself. You mentioned an attorney. He disagreed with the landman as well?
Quite often, the instrument draftsman will specifically address the bonus issue in the deed. If it doesn't, and it's 50/50 across the board, I wouldn't see why they both wouldn't split bonus. I think the royalty is a given.
The wording of the instrument is paramount. The 4 corners rule.
I think you asked my opinion, so I offered it. They say that a bartender is a poor man's psychiatrist. This site is a poor man's lawyer, but not really a substitute for actual legal advice.
Bigfoot said:
Dave:
Thanks for your reply and yes I should have done a better job of spelling out what I was told; but, I just wanted to leave the question open and see what your answer would be. The Executive Rights issue has been the furthest thing from my mind since I thought I totally understood it, then a landman came a courting trying to lease some of my property and we got to talking about one of the people in a group of landowners (neighbors) that I am working with. They actually have the scenario I quoted above. 50%/50% and Executive Rights, nothing else related to minerals in the deed. My understanding was that the new owner with Executive Rights would negotiate the lease; but, each would get their share of the bonus as well as the royalties. When discussing this with the landman, he said that I was not correct, that the person with the Executive Rights would get all the bonus money; but, would have to share the royalties, end of discussion. I questioned him; but, didn't put up an argument. Just figured that I would address this issue as a better understanding became necessary. Then I saw this post today and thought that this might be a great issue for everyone to see and all the while get me straight.
Thanks again for all your help and understanding.
Dave Quincy said:
For the most part, that is true. There have been more than one case where a land owner has said, "There ain't no f***in oil company gonna drill on my land." They then stand in front of the gate with a shotgun or maybe an AK-47. When that happens, the trucks turn around. However, the oil company will then get an injunction that is served by the local sheriff with some possible back-up. At that point, the landowner has to throw in the towel, and allow the drilling to commence. This assumes that a valid lease is in effect.
tony b. said:Thanks for the information guys. From doing some additional investigation of my own it seems as though if I do not get any mineral rights from the purchase of this land, I get no say so in what happens about any drilling set backs, etc. that occur in the future. I see how a land owner's desires can be put in jeopardy.
Dave:
Absolutely! At this point I just wanted to see what your humble opinion would be. I will double check that with my attorney anyway the next time I rattle his chain and at this point it doesn't even matter anyway. Just wanted to see if your opinion was the same as mine. One thing for sure, we are all or at least most of us are learning every day. Not getting smarter, just learning since this stuff seems to evolve. The scenario we have been talking about is a very true scenario and it is truly a neighbor that has been satisfied with my "farm boy" mineral owner interpretation. I believe the landman's understanding is all wet.
Thanks again!
Dave Quincy said:
I was referring to the deed itself. You mentioned an attorney. He disagreed with the landman as well?Quite often, the instrument draftsman will specifically address the bonus issue in the deed. If it doesn't, and it's 50/50 across the board, I wouldn't see why they both wouldn't split bonus. I think the royalty is a given.
The wording of the instrument is paramount. The 4 corners rule.
I think you asked my opinion, so I offered it. They say that a bartender is a poor man's psychiatrist. This site is a poor man's lawyer, but not really a substitute for actual legal advice.
Bigfoot said:
Dave:
Thanks for your reply and yes I should have done a better job of spelling out what I was told; but, I just wanted to leave the question open and see what your answer would be. The Executive Rights issue has been the furthest thing from my mind since I thought I totally understood it, then a landman came a courting trying to lease some of my property and we got to talking about one of the people in a group of landowners (neighbors) that I am working with. They actually have the scenario I quoted above. 50%/50% and Executive Rights, nothing else related to minerals in the deed. My understanding was that the new owner with Executive Rights would negotiate the lease; but, each would get their share of the bonus as well as the royalties. When discussing this with the landman, he said that I was not correct, that the person with the Executive Rights would get all the bonus money; but, would have to share the royalties, end of discussion. I questioned him; but, didn't put up an argument. Just figured that I would address this issue as a better understanding became necessary. Then I saw this post today and thought that this might be a great issue for everyone to see and all the while get me straight.
Thanks again for all your help and understanding.
Dave Quincy said:
For the most part, that is true. There have been more than one case where a land owner has said, "There ain't no f***in oil company gonna drill on my land." They then stand in front of the gate with a shotgun or maybe an AK-47. When that happens, the trucks turn around. However, the oil company will then get an injunction that is served by the local sheriff with some possible back-up. At that point, the landowner has to throw in the towel, and allow the drilling to commence. This assumes that a valid lease is in effect.
tony b. said:Thanks for the information guys. From doing some additional investigation of my own it seems as though if I do not get any mineral rights from the purchase of this land, I get no say so in what happens about any drilling set backs, etc. that occur in the future. I see how a land owner's desires can be put in jeopardy.
Tony,
You have received some good advice. There is also the “accommodation doctrine” you might find useful in considering what to do about the property. Two attorney written blogs about it are here:
http://www.oilandgaslawyerblog.com/2013/02/texas-supreme-court-set-to-aga.html
http://www.oilandgaslawyerblog.com/2013/06/merriman-v-xto-energy---suprem.html
Thank you for the information. The piece of property that we are considering is only 20 acres. Because most mineral interests are not conveyed nowdays I was looking for what the surface owner's right are when it comes to drilling, sites, pumping stations, etc. We may not have any input on what happens in the future but I would like to know that upfront in making our decision. We only have 3 days to decide and I wanted to factor this in. My original question was, what, if any, rights do we have in what goes on in the future and what, if any, language can be put in the sales contract to protect us. Thanks for any advice!
Dear Tony,
Quoting your original question below, you do not have to be concerned about the executive rights at all. Have the seller retain all of the other attributes of the mineral estate, less the right of ingress and egress, which is conveyed to you.
The rights of ingress and egress are one of the attributes of the mineral estate that people seem to forget about. I started seeing a reservation of that type about 25 years ago in Brazos County, Texas.
If you are conveyed that portion of the attributes of the mineral estate, then you have total and complete control to allow an oil company on your property.
It might be a tough sale to the Grantor, because without the right of ingress and egress, minerals could be rendered essentially worthless, depending on tract size and shape.
Discuss this with your lawyer and follow his advice.
Best
Buddy Cotten
tony b. said:
My original question was, what, if any, rights do we have in what goes on in the future and what, if any, language can be put in the sales contract to protect us. Thanks for any advice!
Tony:
I'm sure not part of your discussion; however, I would like to put my two cents worth in on this since this is becoming more and more of a problem as we break up larger pieces of property and withhold the minerals and sell of or break it into smaller and smaller pieces that people might be able to afford. One alternative to getting into a mess that screws up your hard earned and many hours of work such as was mentioned in one of the previously posted links.
Now that horizontal drilling is so easily done and since most if not all wells use either slant hole drilling or this technique these days, there is no real reason that an oil company has to physically come on a small piece of surface unless there is an absolute need for a pipeline, seismic or maybe in rare cases an access to a well site.
Before I purchased a piece of property that I was going to put my blood sweat and tears into, I would require the seller and my attorney to work together and add the proper wording into a deed that any future mineral leases specifically excluded surface access or use for any mineral extraction which would include oil and gas as well as other minerals, like coal or lignite, etc. In my opinion this can easily be done if the previous owner wants to "have his cake and eat it too", so to speak. This is not to say that you wouldn't some day have a full scale gas or oil refinery on the other side of the fence; but, at least your surface would be yours and not belong to someone or some company official setting in an ivory tower somewhere that could care less about your hard work and hapiness.
Just my thoughts and god luck!
tony b. said:
Thank you for the information. The piece of property that we are considering is only 20 acres. Because most mineral interests are not conveyed nowdays I was looking for what the surface owner's right are when it comes to drilling, sites, pumping stations, etc. We may not have any input on what happens in the future but I would like to know that upfront in making our decision. We only have 3 days to decide and I wanted to factor this in. My original question was, what, if any, rights do we have in what goes on in the future and what, if any, language can be put in the sales contract to protect us. Thanks for any advice!
Dear Tony,
You received some more good advice. Keep us posted. Let us know if the grantor accepts a mineral reservation without ingress and egress. If he does, maybe others can try that too.
Buddy,
The owner told me he only has 50% of the minerals after he re-read the sales documents from when he purchased the property in 1999. With that being said, even if he gives away the right of ingress and egress the person who has the other 50% has not. What kind of control do I have then? Thanks for all of your replies!!!
PS Some of this may be over my head but I am trying to learn what I can. Thanks!
Buddy Cotten said:
Dear Tony,
Quoting your original question below, you do not have to be concerned about the executive rights at all. Have the seller retain all of the other attributes of the mineral estate, less the right of ingress and egress, which is conveyed to you.
The rights of ingress and egress are one of the attributes of the mineral estate that people seem to forget about. I started seeing a reservation of that type about 25 years ago in Brazos County, Texas.
If you are conveyed that portion of the attributes of the mineral estate, then you have total and complete control to allow an oil company on your property.
It might be a tough sale to the Grantor, because without the right of ingress and egress, minerals could be rendered essentially worthless, depending on tract size and shape.
Discuss this with your lawyer and follow his advice.
Best
Buddy Cotten
Mineral Manager
tony b. said:My original question was, what, if any, rights do we have in what goes on in the future and what, if any, language can be put in the sales contract to protect us. Thanks for any advice!
Dear Tony B.,
I think that you are in a great position. They MUST deal with you if you have any control of access.
Buddy Cotten
tony b. said:
Buddy,
The owner told me he only has 50% of the minerals after he re-read the sales documents from when he purchased the property in 1999. With that being said, even if he gives away the right of ingress and egress the person who has the other 50% has not. What kind of control do I have then?