I’m am thinking of purchasing a property that owns the mineral rights on it but also has a natural gas well on it. How do I find out if there is a lease on the land or royalties I might expect, and do the producers that hold the lease need to sign a new contract with me, since i would own the mineral rights?
You didn’t say where the property is located. This would apply in Texas but some things might be different in other States.
If there is current production then there is an active mineral lease. The owner of the property, who you say also owns the mineral interest, should be able and willing to provide you a copy of the lease agreement and information about royalties they are receiving. If they aren’t willing to it would be a red flag to me.
If the property owner provides that information, either before the contract is signed or during the buyer’s option period for inspections, it would still be logical for you or someone you hire to do the research it takes to confirm the information is correct. Property owners sometimes think they own full mineral interest but it turn out parts were retained by previous owners in the chain of title.
The well operator doesn’t need to sign a new lease or contract with you because you will be buying the property subject to a lease and the operator’s rights aren’t impacted by the sale. The provision in that lease will be important to you because it spells out the leaseholder’s rights regarding things like locating future wells or using parts of the property related to the operation of the existing well. If it’s a new well you may have it there for years or could become a problem when it gets to the end of it’s life and the site needs to be cleaned up.
If you buy the property you’ll need to contact the operator and provide the documentation they require to transfer future royalty payments into your name.
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Thank you. It in Michigan.
Curious how this worked-out. Did you buy the property? Did it come with the mineral rights or were they previously severed or reserved by the seller?
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