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Mineral Rights?

Posted by mfbenson (My Page) on
Sun, Sep 7, 08 at 20:42

Ok, its finally happened. The country has run out of most of the natural gas that is in easily accesible reservoir rock, and is now turning to the previously un-economicial production rock that creates natural gas for new drilling. This means gas wells going up in suburbia, and a whole lot of homeowners wondering if they own the mineral rights to their property.

Personally, I have been affected by this on two levels: One, my house is located over the Barnett Shale, and two, I have received a written offer for the mineral rights on my house. I did the math and realized it was a lowball offer and have thus far not responded to the offer, but it prompted me to do some research on the issue. Here is what I have found out so far:

1) Mineral rights laws are incredibily complicated.
2) Ask ten experts a question and you will get 12 different answers.
3) If you have the mineral rights, they automatically convey when you sell the property, unless you have a clause in the contracts specifying that the mineral rights do not convey. FIRST QUESTION: Does anyone have a sample of verbiage on this that would stand up in court? Real estate agents are not lawyers and in the Barnett Shale region the practice seems to be for the agents to defer to a lawyer about this question.
4) Finding out if you even own the mineral rights is not easy or cheap, but, as a rule of thumb, *if* you have owned the property for at least a few years prior to the area being considered feasible for oil or gas drilling, and *if* there was no clause when you bought the property, there's about a 90% chance you do own the rights. As a legal matter it will have to be researched all the way back to the soverign of the soil (Private title to all land in Texas emanates from a grant by the sovereign of the soil (successively, Spain, Mexico, the Republic of Texas, and the state of Texas), but as a practical matter going back to when the developer built your subdivision should be good enough. Within the last couple years it has been unheard of for a developer to even get the mineral rights, let alone transfer them to homeowners, but not so long ago it wasn't a consideration. Anyway, SECOND QUESTION: Anyone know any reasonable ways for me to be certain I own the mineral rights?
5) If your house is over production rock, not reservoir rock, you're not going to get rich from the royalties. Production rock yields (at best) $10,000 per acre up front and $400/month royalties for 3 years. (The lowball offer I got was for one-fifth of that.)
6) There are very real concerns with noise, lights, trucks coming and going non-stop (to fracture production rock they inject a slurry of water and sand in the rock, fracturing it. They then have to extract the water back out, which by this point is salty, and haul it away in more trucks.) and not to mention safety. The natural gas that comes out of the well is untreated and does not have that sulfur smell to warn you of a leak. It is corrosive. THIRD QUESTION: Are the people hyping these negatives just trying to hold out for more money, or are they against drilling on principle? Nevermind, you're not in their heads or hearts, I just ask to let people here know I'm a bit suspicious that everyone's angle in this is a bit self-serving. That's why I thought it might be nice to hear what disinterested parties would have to say on the subject. That's your cue. Thank you in advance.


Follow-Up Postings:

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RE: Mineral Rights?

I tried to buy a house on a little over an acre once and the seller wanted to retain the mineral rights. We were going to go along with it although I wasn't happy about it but the deal fell thru for a multitude of other reasons. Our purchase contract specifically said that mineral rights were not going to be transferred. They would be retained by the seller. I don't have my contract anymore but I believe it was just written in by the seller's lawyer.

I wasn't necessarily opposed to drilling--I just wanted to have say over my property and what would be allowed to go on.


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RE: Mineral Rights?

We have been looking for acreage for several years now. One of the most important criteria is the mineral rights go with the property. If the mineral rights have been sold/leased to someone else we do not look further into the property. Since we have other, very specific requirements, it has been a challenge.

mfbenson, good luck. Hire an excellent attorney who is well versed in mineral rights laws and regulations in your state.


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RE: Mineral Rights?

I am by no means a tree hugger, but if you care even a little bit about the health of your land, don't ever, EVER allow your land to be drilled. The environmental impact is horrifying-- look into what they throw down those wells in order to get them to produce gas. It is truly mind-blowing.

My parents own about 100 acres in northwestern PA, where oil was king back in the day... it slumped quite a bit over the years, but recntly with the cost of oil/natural gas skyrocketing, the drilling race is on again. When they bough the place 12 years ago, the deed conveyed with the mineral rights, although at some point in the past the mineral rights HAD been separated from the deed... well the drilling people started buying mineral rights in their area left and right, getting tons of landowners to gladly sell off their rights for promises of big riches off the royalties. Those "big riches" might be a couple hundred bucks here and there for the lucky ones-- and meanwhile all sorts of volatile chemicals are being pumped into the ground, causing who knows how much soil and groundwater contamination. (It's not just "water and sand," believe me.)

Not coincidentally, cancers and weird birth defects are rampant where my parents live... But no one hears or cares much about it because it's such a sparsely populated, economically depressed area.

It's not about the money, it's about your health... RUN DON'T WALK from the thought of allowing your land to be drilled!


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RE: Mineral Rights?

Wow, cnvh, if everyone felt like you do we'd still be living in mud huts waiting for you to bring dinner home on the end of your spear.

I hope you don't drive or use anything that requires oil/gas. Otherwise, YOU are the one causing the need and you should thank your lucky stars someone is willing to allow drilling so you can have your comforts.


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RE: Mineral Rights?

We also live over the Barnett Shale. It's my understanding that if a certain percentage of the mineral-rights holders in an area enter into leases, there's nothing you can do about the natural gas being taken from your property as well. (It's not like they can extract the natural gas from your neighbor's land but not yours.)

Many of the neighborhoods in the area have banded together to negotiate better offers. You should look into whether your neigborhood has as well.


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RE: Mineral Rights?

We own 38 acres in Cental PA. I have three wells on my property, one of which was there when we bought the land. An additional one was placed on another piece of my property and I own the rights to one just put on the property behind mine (because previous owners sold off this piece but did not transfer the mineral rights). I get a percentage royalty on these three wells every month. I have not spent any of this money and now have not only recouped the purchase price of my property but twice that much in 5 years. The gas company maintains the roads on the property and have been very good to us. The wells are on corners of our property and you don't even know they are there. Plus we get free gas to heat our home until the wells run dry....


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RE: Mineral Rights?

dktrahan, my problem isn't with the drilling, per se. But knowing how they go about it, and what chemicals they use in the process-- at least where my parents live-- I would no more invite drilling on my property than I would dump a hundred gallons of diesel fuel near my well or bury a dozen leaky car batteries in my vegetable garden. No way, no how.


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RE: Mineral Rights?

There's a gas frenzy going on here in NE PA too. I'm worried about the water contamination specifically--we're on a well--so I'm hoping they don't do any drilling near us. We don't have the mineral rights to our house--which was news to me when I got the deed in the mail; it had never been mentioned in the contract(s)--but it's only 3/4 of an acre anyway so they couldn't very well put up a rig. Here in PA you don't have the right to support of your house, which means the coal company can take everything out from under you and your house can fall into a hole and you're screwed. So if your neighbors are all signing up, you might want to do so too so you at least get something out of it.

The people who signed up early on are probably kicking themselves now, as the price per acre has gone up from a few hundred to ~2,000.

Our state representative has held some informational meetings at a local school; the gas company has also held an 'open house' at the fire hall. Maybe you shd call arounf and see if anyone is having any such things, so you can attend and ask questions.


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RE: Mineral Rights?

"But knowing how they go about it, and what chemicals they use in the process..."

Not a whole lot of anything toxic, and the wells are required to be sleeved to prevent ground water contamination.

Oil and gas drilling has changed a lot since Pa was in full production.


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RE: Mineral Rights?

"Not a whole lot of anything toxic, and the wells are required to be sleeved to prevent ground water contamination."

Hahaha... You must not be from northwestern PA. There's drilling going on within a mile of my parents' place; I have SEEN with my own eyes how the drilling goes there. And smelled it. You can't tell me that there's not major environmental hazards involved.


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RE: Mineral Rights?

I have been a mineral researcher/landman here in the Barnett Shale & I might be able to answer some of your questions. I'm not clear whether you got an offer to lease your mineral rights or an offer to buy them. Let me just say - DO NOT SELL YOUR MINERAL RIGHTS! They are worth far more if you lease them. The Barnett Shale is the biggest field ever found in the US & it will continue to produce for many years, and produce big.

1) I'm not a lawyer, so won't go into the laws, but I will say that the verbage on WD's can be confusing.

2) Could be - especially if they benefit from the answer.

3) Yes, if you do not specifically retain your mineral rights, they convey with the property when you sell.

Examples of verbage on standard WD which may or may not retain minerals: Grantor (seller), for the consideration and subject to the reservations from and exceptions to conveyance and warranty, grants, sells, and conveys to Grantee(Buyer) the property, together with all and singular the rights and appurtenances thereto in any wise belonging, to have and hold it to Grantee, grantee's heirs, executors, administrators, successors, or assigns, as the case may be, forever. Grantor binds Grantor and Grantor's heirs, executors, administrators, successors and assigns, as the case may be, to warrant and forever defend all and singular the property to Grantee and Grantee's heirs, executors, administrators, successors, and assigns against every person whomsoever lawfully claiming or to claim the same or any part thereof, except as to the reservations from and exceptions to conveyance and warranty.

This simply means that the seller is conveying to buyer the property EXCEPT for anything that has been conveyed before, whether it is an easement or retained minerals. If this is the wording, you have to go back to WDs from previous owners to find out if any minerals have been conveyed before. If you go all the way back to the land patent and haven't seen any specific mineral exceptions, you have 100% of the mineral rights to the land. Very rare.

A WD that specifically retains minerals is going to read the same until the end, and it will say something like this: SAVE AND EXCEPT the Grantor retains (and there will be a fractional amount or percentage here)of the remaining minerals rights to this property. Or it could say SAVE & EXCEPT the Grantor retains (fractional amount) of the total mineral rights to this property.

In the first verbage, the seller is retaining a fraction of the remaining minerals, and let's say the fraction used is 1/2. IF the seller has 100% of the minerals, that means he is keeping 50% and conveying 50% to the buyer. BUT, if a previous seller kept 50% of the minerals and this seller only has 50%, this verbage is saying that he is keeping 25% and conveying 25%. Again, you have to go back through the deeds and find out if and when minerals have been retained. It could be that this seller only had 15% of the minerals, and so the 1/2 he kept is only 7.5% of the total and the amount conveyed also only 7.5%.

The 2nd example is much better IMO, but it doesn't tell the buyer if he is getting any minerals at all. If the seller only had half the total minerals to start with, when he kept 1/2 the total, or 50% of the total, he kept all the rest of the minerals and no minerals were conveyed to the buyer. Again, gotta go back to through the deeds.

And that is why there are people like me shuffling books at the court house all day. ;)

4) Not easy, but can be free if you do it yourself. Once you have looked at 20+ WD's, the words SAVE & EXCEPT, minerals, reserved, fractions & percentages just jump off the page at you. Many times there is a separate page of the WD for the exceptions. And many times you find previous mineral leases which spell out the amount of minerals retained by the current owner.

Mineral rights have been kept since the early 1900's and even before, and most savvy sellers have been keeping at least some minerals rights since the last oil boom, not just in the last 5 years. If you live in the country, your odds of having minerals is fairly low unless you bought from someone who had had the land in the family for a long time & had a bad legal advisor, or if it was a foreclosure. If you live in the city, your odds are better because drilling in town is harder & wasn't considered possible until this new technology.

To answer your second question here: Yes, go to the county court house & do it yourself. Email me & tell me what county you are in & I'll walk you through the process.

5) Yes, for now. The harder it is to find gas, the more they are going to create ways to get it.

6) I really don't know. I was just a researcher. I think there are concerns for just about everything, but I still drink out of plastic bottles and have natural gas powered heat in my house. I grew up in oil country & I hated the way the bouncing rigs spoiled the beauty of the land. But now that I am grown, I realize that I use gasoline and other products from the oil field, and will continue to do so until there is an alternative I can afford. I don't want to be one of those who say "not in my backyard - go defile someone else's land". If our country is dependent on gas & electricity, the wells have got to be somewhere, the nuclear power plants have got to be somewhere, the cement plants have got to be somewhere. Within 10 miles of me are a water treatment plant, an insulation plant, a cardboard manufacturer, and a cement fiberboard manufacturer. There is a farmer nearby who has a plane fly over spraying who-knows-what several times a year. They all stink from time to time, and I'm sure they are polluting the air I breathe. I don't know of anywhere except maybe the desert that is truly safe from pollution and health concerns, and I can't live there.
And like kgsd said, they are going to drill somewhere near you and get the gas out from under your land with or without your lease. It's like one big pool of gas. There have been stories of people who held out & got big bucks for their effort because their effort prevented a well from being drilled in a large area. That's when enough people joined together that it made a difference to the gas co. One person holding out, just gets nothing. The reason gas companies want so many wells even though they come from the same pool of gas is more money.

tx_happy_camper brought up a good point too. If you want to buy land & all the minerals are reserved, you can add a waiver of surface rights to your WD. In it, the mineral owner/s agree not to touch your land (in much longer verbage).

Btw, I'm not really a disinterested party, though I have nothing to gain with my answer. I have no minerals rights with my property, and I bought it 13 years ago.


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RE: Mineral Rights?

"And smelled it. You can't tell me that there's not major environmental hazards involved."

I never realized smell was a marker for environmental damage.

I have been around a number of oil wells, having worked with oil well logging equipment.
Most of the stench is from the rock and strata being drilled through and brought up in the drilling mud.
It was already present, not anything added by drilling.

Ever smelled freshly turned earth at a large excavation?
It often reeks from material released also.


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RE: Mineral Rights?

My father has an excavating business and I grew up learning how to run backhoes and loaders-- so yes, I am fully aware of what "freshly turned earth" smells like.

I realize that I'm not going to change anyone's mind on this-- for a lot of people, the dollar is the bottom line. So be it...


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RE: Mineral Rights?

Hi mf benson,
I've read the posts and agree that you should band with your neighbors and lease the rights. BTW, in past land runs for shale oil the price per acre has eventually gone to 10K.
We live in gold country and my husband buys and sells real estate. we NEVER buy land without the mineral rights...and we've seen plenty of houses in this county drop into a mine shaft running underneath them...oops! As for clean up, I know a man who bought retirement land, now declared a superfund sight, but no money available for cleanup. Just bills and demands from the county. Bankruptcy.


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RE: Mineral Rights?

Weyerhaeuser never sells mineral rights that I know of though perhaps the Quadrant division does. I don't think it would be too hard to find a copy of one of their contracts.


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RE: Mineral Rights?

I live in cedar creek, texas and wanted to sell five acres of land and retain the mineral rights for myself. I couldn't sell it without the mineral rights. I've been sitting on this piece of trash, holding on to my mineral rights, getting old, no oil that I've seen. Maybe I should consider letting the mineral rights go. Either that or starve or get thrown out for not paying my taxes.


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RE: Mineral Rights?

Did not realize this was an old posting, but whatever you do< DO NOT realease any mineral rights.
Google North Dakota and see what is happing involving oil in this state. We are # 3 in the nation for drilling and still our oil plus Canadian is being sent out of the country the brought back. The rules are very strick now and all of us are benefiting from the money, and yes a large percentage is in an account that cannot be touched for several years.
Just a thought.


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