Selling Land with Mineral Rights AFTER Entering Into Oil and Gas Lease

[worriedworried]

What is the name of your state? Texas.

When we purchased our house, we didn't even know we were obtaining the mineral rights. Well, last fall a company came through the neighborhood setting up "oil and gas leases" with everyone (we are all on small 50x100 foot lots. We signed a lease, and understand that we'll receive a royalty based upon any gas they find when they drill (they are not drilling "on" our land but instead horizontally under the neighborhood).

Now, to my question. We are selling our property. It's a small lot and we're not concerned with keeping our mineral rights (it would complicate the sale this late in the game). If we don't reserve our mineral rights, and simply let them transfer with the sale of our house, are we forfeiting the royalties we would obtain under our current lease; or, do we automatically retain the royalties generated by the lease we signed last fall, since we were the owners of the mineral rights when the company started drilling?

 

[rmet4nzkx]

Mineral rights are separate from property. Tracks of land are partitioned with great creatitivity. You could have a pool of oil below you and with the wellhead away from your property or a wellhead on your property and the rest of the track on someone elses property, they will get the majority, you will be lucky to see much in the future if at all. We had oil royalties that sat caped for decades in reserve, later taped... well good luck.

 

[worriedworried]

Sorry, but I don't understand your reply.

My question was related to whether or not we would retain our royalty rights under our oil/gas lease after we sell our house without retaining mineral rights, or if the royalties transfer to the new owners even though we were the people to sign the oil/gas lease.

I was under the impression that he oil/gas lease would stay with us even if we eventually let the mineral rights go with the property when we sold it.

 

[rmet4nzkx]

I answered your question,


Mineral rights are separate from property.

 

[worriedworried]

I'm not asking if mineral rights are separate from the property. I've always known that they are separate.

My question is if royalties on a oil/gas lease remain with the people who signed the lease, or if they transfer with the ownership of the mineral rights.

 

[Kevin.ram]

I realize this is an old post, but will answer for future readers.

The lease will most likely transfer to the new owners, if you do not specifically reserve mineral or royalty rights in the deed. The lessor will then attempt to ratify the existing lease with the new owners and they will receive the royalties. Oil companies would not take a lease that could be terminated by selling the property. "..Lessor, his heirs, and assigns..."

I imagine the original responder had a bad experience with an oil company, probably due to lack of comprehension. If your property is pooled, or unitized, into the unit designated by the lessee (oil co.) and a successful well is drilled and completed (starts producing minerals), then the mineral owner (lessor) will be entitled to royalties, based on your proportion of the unit. The original responder was probably not included in a unit.

There have been problems in the past receiving royalties, mostly 50 or so years ago. Nowadays oil companies are much more self-conscious of their image, with the freedom of information, and are regulated more than you'd think were you to listen to Obamaniacs. Hence they tend to pay what is due.

In the future, IMO, it is a good idea to always reserve minerals when selling property. There may be no production or activity now, but there definitely could be in the future. It may turn out to be a payday for your great-grandchildren.