What Are The Different Types of Mineral Title Opinions?
May 24, 2016
When energy companies pursue the lease of mineral rights, they must first investigate whether this venture is likely to be productive. There is much research that goes into determining whether a tract of land is marketable, the details of which are compiled into a document called a Mineral Title Opinion. There are various types of Mineral Title Opinions that play a role in helping companies decide whether they should invest in a project from landowners who are interested in the sale of their mineral rights.
Through careful analysis of the various expert opinions regarding the proposed project and project rules documented in the process, companies and landowners can decide whether or not to proceed.
Preliminary, Original, or Drilling Title Opinions
A Primary, Original, or Drilling Title Opinion is the initial overview of a tract of land, an impression of whether that land is marketable in the sale of mineral rights and what would be needed to drill that tract. A Title Opinion names all parties with an interest in the drilling, points out any mineral rights issues to be addressed, and presents a basic plan for the drilling project. All of this is usually done before a drilling company signs a lease with land/rights owners. Some companies may also request a Drill Site Tract Opinion to assess only the drilling site.
Supplemental Title Opinions
Occasionally after the creation of the Preliminary or Original Title Opinion, there is other information to add to the Original Title Opinion that must be included in the documentation. This is provided in the form of a Supplemental Title Opinion, which acts as an amendment to the Preliminary Opinion.
An Acquisition Opinion is essentially the same as an Original or Drilling Title Opinion; however, it is written for companies interested in purchasing tracts of land and buying mineral rights from rights owners.
Division Order Opinions
Once a well is drilled and becomes productive, a Division Order Opinion is issued. This Title outlines the details of collection and measurement of any product and how the proceeds from the sale of that product must be disbursed among all owners.
When companies plan to either borrow money to finance the purchase or lease of a tract of land for drilling or would like to use an owned tract as collateral for other exploration, lenders give an opinion as well. These opinions outline any potential risks and protect the investment for both the lender and company by helping them make wise investing and drilling decisions.
Mineral Title Opinions are an essential part of the sale of mineral rights, the business documentation that ensures a profitable and legal business transaction. When these different Title Opinions are drawn up by attorneys specifically experienced in mineral rights and Title concerns, businesses seeking to explore land for mineral resources can get a complete and detailed picture of the project. This protects the interested business as well as all land and mineral rights owners make sure that drilling projects will be profitable!
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