Mark...aside from the IRS, of course, states keep this data in some way probably, because the interest owners are taxed. Have you thought about checking with individual states?
I have an interest that is .00007% and they send me a check every 3 years for 23 cents. I guess if you had a magnifying glass, you could count that too! My wife has 20%, but non producing. It would be interesting to know just how many mineral owners there are.
@John Allen, yes, contacting the states is the appropriate starting point. Not all the states track this information outside of tax reporting. Also, the ownership is commonly managed at the county level. There are 3,144 county entities in the US. Each one has its own set of rules for releasing information and in many cases the only method of access is to visit the county seat. This presents a set of tasks so large that an empirical study would be nearly impossible to complete in a timely fashion.
@G T, you are far from alone. I believe that many estate and trust attorneys continue to advise families to divide interests in the settlement of estates. I am not an attorney, but if one were to ask me, I would suggest keeping it together to minimize paperwork and expense.
Your wife's 20% in non-producing land is an interesting point that deserves its own thread to discuss whether "dormant mineral" laws are reasonable. All minerals are dormant until someone wants them, so in my opinion such laws constitute unfair "taking" of real property rights. If someone wants to reply to this statement, please start a new thread and post a link here.
There's no centralized location for such documentation that I know of, but there is a good place to start to prove that "big oil" mineral rights owners (ownership of mineral rights in the land, NOT ownership of the leases borrowing the mineral rights for a period of time--two different things!) probably don't go above 500 nationwide. Try looking at the Unclaimed Property pages of each of the 50 states' websites.
My professional opinion: non-"big oil" mineral rights owners probably number between 8 and 10 million. Why so many? Fractionalization. And probably no more than 90% of them even know they are owners, because so many owners pass away without a will and statutory inheritance gives heirs their ownership without them knowing it. But they are still current owners whether they know it or not. Which brings us back to where to look for some numbers to back me up on this: Unclaimed Property Records.
Start with Delaware, Texas, Oklahoma, Louisiana, and California, their Unclaimed Property websites and read what you find there about how much money and to how many owners, "big oil" pays over to the Unclaimed Property Division of each of those states. Why Delaware, when it's not an oil & gas producing state? Because law requires that if no address was ever known for an owner, the payer must remit it to the state of the payer's incorporation and NOT to the state in which the producing land is located (Texas v. New Jersey court case). Delaware is most often the state of incorporation for companies. Also try Nevada, it's still a big favorite, too.
You would need to visit the UP Division website for each state to try and bring together an approximate number, but just to surprise you, I will tell you that Exxon and its subsidiaries combined have more than 1 million royalty owners in their database records. And that's just Exxon. Now add the rest...
When it comes to property rights, the United States is special. As an individual, Americans are guaranteed the right to own the minerals beneath the land. Except for early pioneers in some Canadian provinces, no other country allows its citizens to own the minerals beneath the land.[citation needed]
An estimated 80% of the subsurface hydrocarbons in southwest Manitoba (the only area of the Province with known subsurface hydrocarbon reserves) are privately owned, the vast majority by individual freehold owners. [2] Wikipedia
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Yes, Canada and the U.S. are the only countries still allowing private ownership of natural resources, since Australia nationalized their resources in 1995. There used to be private owners there, too. We need to always fight to protect our property rights here in the U.S. Our ancestors died on numerous battlefields to secure them for us from generation to generation.
WOW, how many mineral rights owners? Hundreds of millions..LITERALLY, do you own a house, you are probably a mineral owner. THE GREAT MAJORITY OF LAND OWNERS ARE MINERAL OWNERS.
John E. Broyles said:
WOW, how many mineral rights owners? Hundreds of millions..LITERALLY, do you own a house, you are probably a mineral owner. THE GREAT MAJORITY OF LAND OWNERS ARE MINERAL OWNERS.
If you own a house in Texas that you purchased in the past 25 years, it is highly unlikely that you own the mineral rights under your house. Housing subdivisions are formed by a developer who creates a development company to sub-divide and deed out the lots. The developers routinely (under whatever legal name they choose) retain the mineral rights in all of the land when deeding it to their development company. In turn, the development company retains the deed restriction "rights" in their deed to the new homeowner, until the subdivision is developed sufficiently for a homeowners association to be established. At that time the development company deeds over the deed restriction rights to the lots, to the homeowners association. I speak only of Texas because I know what I just said is accurate for Texas, but I don't know about other states.
But one comment you made... "Hundreds of millions..." might only be slightly exaggerated, if one considers the many tens (possibly hundreds) of thousands of Americans who die each year owning mineral rights they don't know about because they inherited automatically under the laws of descent and distribution in the state in which the land is located. Not all heirs are children of mineral owners, and even when they are, you would be surprised how often they did not know their parent owned such rights in land off somewhere else. And when the owner dies, their ownership (they didn't even know they have) then passes automatically to their heirs at law, who in turn will not know that they own it. I work with this very scenario routinely in my profession in the oil industry.
Only the states busy passing term limits on inactive oil, gas and mineral rights, allowing those rights to reattach automatically to the surface ownership at the end of the grace period of title inactivity, are trying to put a stop to this endless fractionalization getting in the way of effective oil and gas leasing and production.
So just how DOES one go about putting an omniscient finger on the exact number of mineral rights owners in America?
Marsha Breazeale said:
John E. Broyles said:WOW, how many mineral rights owners? Hundreds of millions..LITERALLY, do you own a house, you are probably a mineral owner. THE GREAT MAJORITY OF LAND OWNERS ARE MINERAL OWNERS.
If you own a house in Texas that you purchased in the past 25 years, it is highly unlikely that you own the mineral rights under your house. Housing subdivisions are formed by a developer who creates a development company to sub-divide and deed out the lots. The developers routinely (under whatever legal name they choose) retain the mineral rights in all of the land when deeding it to their development company. In turn, the development company retains the deed restriction "rights" in their deed to the new homeowner, until the subdivision is developed sufficiently for a homeowners association to be established. At that time the development company deeds over the deed restriction rights to the lots, to the homeowners association. I speak only of Texas because I know what I just said is accurate for Texas, but I don't know about other states.
But one comment you made... "Hundreds of millions..." might only be slightly exaggerated, if one considers the many tens (possibly hundreds) of thousands of Americans who die each year owning mineral rights they don't know about because they inherited automatically under the laws of descent and distribution in the state in which the land is located. Not all heirs are children of mineral owners, and even when they are, you would be surprised how often they did not know their parent owned such rights in land off somewhere else. And when the owner dies, their ownership (they didn't even know they have) then passes automatically to their heirs at law, who in turn will not know that they own it. I work with this very scenario routinely in my profession in the oil industry.
Only the states busy passing term limits on inactive oil, gas and mineral rights, allowing those rights to reattach automatically to the surface ownership at the end of the grace period of title inactivity, are trying to put a stop to this endless fractionalization getting in the way of effective oil and gas leasing and production.
So just how DOES one go about putting an omniscient finger on the exact number of mineral rights owners in America?
hundreds of millions IS an exaggeration. I have worked in this business for 35 years and know the number of mineral owners is "millions & millions-- iknow of no way to know positively, and why would one need to?
Actually, a group that is involved with mineral owners has testified in Congress that there are more than 8 million private mineral owners. This research was done using the division of interest information that used to be sent out with Division Orders.
Mary Ellen Denomy, CPA, MBA, APA, MAFF
Dear Ms. Denomy,
That group actually testified that there are appx 8MM royaty owners in the US. That has nothing to do with mineral owners. That is only referring to interests in production. As you know, much more mineral interests are not in production than those in production.
I do like your CV and would like to explore your services further.
Best
Buddy Cotten
Dear Mr. Cotten,
Most of the CV's out there publicly are a little dated-as you know, the work in this field is never ending. I have finished 5 audits this year already and am leaving for Houston at the end of the week, for another one. I am so glad that you are out there doing the mineral managing-we need tons more of you!
Mary Ellen
Buddy Cotten said:
Dear Ms. Denomy,
That group actually testified that there are appx 8MM royaty owners in the US. That has nothing to do with mineral owners. That is only referring to interests in production. As you know, much more mineral interests are not in production than those in production.
I do like your CV and would like to explore your services further.
Best
Buddy Cotten
Mineral Manager
The California chapter of the National Association of Royalty Owners considers 500,000 an "in the ballpark" estimate of mineral interest owners in California. That group is seeking support for a proper study, as this question does come up from time to time. In the current political environment, owners and those in the industry should take stock of the numbers. The elected leaders do not seem to appreciate how many people are impacted by this rare right.
I am a mineral owner and you are a mineral owner; so, we know there are at least two, right now! My point is that we are shooting at a moving target. Every time some one passes, restructures, goes bankrupt, etc., mineral ownership changes. This often happens before the well produces; and, ownership almost always changes during production. This may be getting a little off topic; but, this growing number of mineral owners drives up the cost of production. In Louisiana, if there is no production, mineral ownership reverts back to the land after 10 years. This was done to try to keep all the minerals from ending up in the hands of the wealthy.
Regarding a study of ownership, conducting a study of temporal data is worthwhile. As it stands, there is no authoritative source to use in support of an otherwise a cogent argument.
The "dormant mineral" laws are grossly unfair and misguided. Lack of production is a poor way to determine the disposition of an asset because of the myriad of forces that impact whether an interest is developed now or later. Further the time period, 10 years or any number, is utterly arbitrary and meaningless. In my view, these laws undermine the property rights of all citizens and codify administrative taking without due compensation or process. FWIW, I assign lower values to minerals in those states, relative to comparable assets in other states, because of the inherent risk, which in turn diminishes the value for the seller. One might argue that these laws set the stage for taking of all mineral interests by government agencies and have very little to do with wealthy landowners and investors.
Landowner said:
I am a mineral owner and you are a mineral owner; so, we know there are at least two, right now! My point is that we are shooting at a moving target. Every time some one passes, restructures, goes bankrupt, etc., mineral ownership changes. This often happens before the well produces; and, ownership almost always changes during production. This may be getting a little off topic; but, this growing number of mineral owners drives up the cost of production. In Louisiana, if there is no production, mineral ownership reverts back to the land after 10 years. This was done to try to keep all the minerals from ending up in the hands of the wealthy.
Dear Mr. Broyles,
I am not trying to be picky, but your statement is not entirely accurate as to Louisiana law.
The mineral code allows for the interruption of the 10 year prescriptive period of the mineral servitude by the good faith drilling of a well, production or not. If there was production for example for 99 years and the minerals were severed from the surface 60 years ago, then the mineral servitude would be extinguished 10 years following the last day of production, assuming that no further attempt at drilling (good faith use) was made during that time. There are several ways to extinguish a servitude, non-use being one of them. Use is further defined as a good faith attempt to establish production. Please see Louisiana RS 31:27. "Non use" is the determinant, not "no production."
As to royalty reservations in Louisiana, actual production must be obtained in order to interrupt prescription.
Best
Buddy Cotten
I DO NOT know where yu are quoting me---can't find it. However your example of 99 years, etc. is quite stretching. Got a real example? Anyway thanks. I confess to not knowing that one.
Dear Mr. Broyles,
My mistake. There was a post attributed to you where you quoted a user by the name of "Landowner." Landowner made the not entirely correct statement. I really don't want to go around correcting people, but I also don't want people to be totally misled or misinformed.
Again, my apologies,
The nearly 100 year old productive lease is actually a real example in the Iowa Field, in SW Louisiana, One well bore from about 3000 feet has produced over 1MM BO. The point is, production is only one of the items that interrupt the mineral servitude in Louisiana. What I find amusing is that in SW Louisiana, the name of the town, Iowa, is pronounced "eye-oh-way."
Best wishes and good graces,
Buddy Cotten