Legal Question in Real Estate Law in Texas

mineral rights on my lot...

i have received a letter from a drilling co. that wants to either lease/buy my mineral rights on my lot...if we lease,are we liable for any expenses that they incur? if we decide to sell our lot before the end of the lease,how would that work? is this a good idea to get involved in this as we know nothing about the company? should we just sell the mineral rights as this is also an option? there are 8 properties involved and they would be drilling for gas/oil just a short way away from our home....thank you for any input you can share...they have sent us leases to sign but i know nothing about these things and need advice...


Asked on 6/23/06, 10:09 am

1 Answer from Attorneys
Joseph A. McDermott, III Attorney at Law

Re: mineral rights on my lot...

An oil and gas lease is different from a lease of the surface property in many respects. Maybe the most important difference is in the lease term. O&G leases provide that the lease is for a term of years, usually 1-5, and "for so long thereafter as oil and gas is produced." This means that if a successful well is drilled, the lease will run for as long as the well produces. Of course, you will receive a portion of the proceeds of the sale of production, called a "royalty," each month. This can end up being many times the value of the up fornt payment, or "bonus" you get for signing the lease. Also, typically, you are not responsible for any expenses of drilling. Given this, it's generally a good idea to lease rather than sell your mineral rights. Also, you can negotiate terms of the lease regarding, for example, how close to your home the well can be drilled. I'd be happy to help you review the lease.

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Answered on 6/23/06, 10:52 am


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