How Selling Oil or Gas Rights Impacts Your Surface Rights!
August 16, 2018
Land surface control and value change the moment a contract for selling gas rights is signed.
Avoid potential legal issues by knowing what to expect and how your land surface could be impacted if you sell.
Mineral Estate and Surface Estate - Two Different Things
A critical factor that mineral estate owners must understand before selling mineral rights is that once this is done, the surface and the ground beneath it become two separately controlled entities.
You may own the land and retain the right of selling oil rights to produce the minerals within your land; however, once you do, the surface and land legally become two different elements throughout the length of the contract with the buyer.
The reason is that in order for the mineral estate buyer to be able to access the oil or gas, they must explore and drill through the surface.
This may seem like common sense; however, what many estate owners do not realize is the two significant ways this arrangement can affect their land: control over the surface and land value.
Selling Mineral Rights Affects Control of the Surface Estate
The important thing that you as a landowner must understand when selling gas rights is that you lose all control of the surface when you do this.
You will still own the land; however, your buyer gains control over the surface so they can extract oil and gas from what is underneath.
This often means drilling in places that could affect how you use the remaining land surface while production is going on.
It is also important to note that groundwater is assumed to be a part of the surface.
In some cases, landowners selling mineral rights may be able to work out agreements ahead of time with their buyers so that both parties can achieve their goals.
In most cases, the legalities of contracting your rights to a buyer means that unless there is a very good reason why you should remain in control of certain parts of the surface, your buyer will maintain control.
Therefore, working with a lawyer is highly recommended to make sure that any compromises are worked out and each party understands what they do and do not have control over.
Land Value Can Be Affected
The other important factor to consider when selling oil rights is land value.
Should you decide to sell your land after selling your gas rights whether or not oil and gas are already in production, you could see either an increase or decrease in your land value.
Increases usually occur if there is a high expectation of what could be produced by the land or if it is currently producing well.
You could see a decrease in land value due to the destruction of the surface if drilling has made the land unfit for other use.
You must also consider the fact that unless specific details on liabilities and compensation for damages are spelled out in the contract ahead of time, energy companies have very few liabilities in terms of the destruction of your land.
Be Careful When Selling Oil or Gas Rights
The important point to take from this if you are selling mineral rights is that unless you understand your landowner rights, including those you will waive by selling these rights, you could end up dealing with a very costly, unexpected situation.
Selling Oil Rights In Texas?
Contact Permico Royalties Before Selling Your Mineral Rights!
Call (432) 242-7335!
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