Complete noob here looking to purchase some real estate in TX. Came across a 160+acre property in west TX described as State classifieds minerals on land with 4 oil producing wells. I did some research but to my untrained mind, everything was mumbo jumbo. Could anyone explain what " state classified minerals " are and what the implications are to owning /purchasing this property?
The State of Texas owns the minerals. There are varying treatments for state-owned minerals.
In certain tracts the surface owner acts as agent for the State in leasing the minerals and the surface owner receives 1/2 of the royalties (often referred to as “mineral classified” or “Relinquishment Act Lands”. In that case, the right to receive royalties from currently producing wells may pass on to the new surface owner or the buyer and sellers can negotiate who gets the royalties. In other cases, the State leases the minerals and receives all royalties; the surface owner receives no minerals.
There are also situations where the State receives a set royalty interest on a portion (often 1/2) of the minerals and others own the remaining minerals.
As surface owner, you will not be able to prevent or control the surface use by the oil companies. You need to get an explanation in writing from the seller as to the status of the minerals and royalties. Also, you can determine the mineral leasing and other information about the tract from information on the GLO website. Keep in mind, that more recent surface sales by the State, the State has reserved all water rights and other rights. You will want to review the deed out of the State when the surface was sold.
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Thanks for taking the time to explain - very insightful information. I will work on your pointers to help me make an informed decision.
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