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  • Why Are There So Many Unclaimed Oil and Gas Royalties in Texas?

    September 5, 2016

    Royalties in Texas

    The process of leasing oil rights, then making royalty payments to owners should seem pretty straightforward. Energy companies contract with mineral rights owners, drill wells, and pay their agreed portion to the owners as part of a business arrangement that is very common in states like Texas. Yet sometimes actually paying the royalties to the right owners is a lot more complicated than it seems. As a result, there is currently a glut of nearly $475 million in funds representing unpaid oil and gas royalties being held by the state that is looking for the right owners to be paid.

    Current Oil Boom Means More Royalties Unpaid

    Evidenced by the growing amount of unpaid royalties being surrendered to the state by energy companies, Texas is experiencing two significant trends right now in oil and gas production. The state is currently experiencing yet another oil boom due to the continued location of minerals in new areas, which means that drilling and production are once again on the rise.

    Due to this rise in production, more mineral owners are earning royalties than ever before. This increase in production has led to an increase in unpaid royalties caused by an inability to determine royalty owners. In the past few years alone, millions of dollars per year have been submitted to the state as unclaimed, with only a small percentage of that money ever being claimed.

    Determining Mineral Rights Ownership More Complex

    Title research of land and mineral ownership can be a complicated undertaking in Texas. It cannot simply be assumed that landowners are actually the holders of mineral rights to that land, since there are different ways that mineral rights can be transferred. Every day, gas and oil rights are sold separately from the actual surface land and family members inherit rights. Sometimes the problem is as simple as someone moving and not notifying the energy company where to send payments.

    These points alone make researching ownership a challenging process. With exploration and drilling in newer areas, the problem gets even more complicated. As energy companies have expanded into untouched regions in Texas, many are realizing that much of the land is either unclaimed or have no valid records as to who owns the mineral rights. Companies can apply for court permission to drill by negotiating a neutral royalties deal that considers an unknown owner; however, that still leaves them owing royalties with no one to pay it to.

    Companies are then required to hold this money for three years, after which it must be submitted to the state. The Texas Comptroller maintains an account of all unpaid royalties, holding these funds until someone comes forward to claim it. Most of the time, people don’t even realize it is sitting there waiting for them.

    While this may sound like a problem only for owners of gas and oil rights, it actually makes the whole oil production process more challenging and time-consuming as well. Energy companies in the state lease all that they can through conventional means, then have to go back and determine how to legally deal with all the unclaimed parcels. The good news is that the state protects the rights and the royalties of absentee owners. Those who own, or could own, mineral rights in Texas may have a surprise waiting for them!

    Need To Learn About Mineral Rights In Texas?

    Permico Royalties Can Help Sell Your Mineral Rights!

    Call (432) 242-7335!

    Additional Articles:

    Oil and Gas Lease Contract Options - Primary vs. Secondary!

    Oil and Gas Lease Negotiations - Considering Valuation Variables!

    What is the History of the Oil and Gas Lease?

    What Are The Different Types of Mineral Title Opinions?

    Selling Your Mineral Rights – What Is The Role Of A Landman?

Topics

  • Mineral Rights For Sale in Texas
  • Mineral Rights For Sale in the United States
  • Mineral Rights For Sale in West Texas
  • Mineral Rights in Texas
  • Mineral Rights in The Permian Basin
  • Mineral Rights in the Permian Basin Texas
  • Mineral Rights in The United States
  • Mineral Rights in West Texas
  • Oil and Gas Royalties in Texas
  • Oil and Gas Royalties in the Permian Basin Texas
  • Oil and Gas Royalties in the United States
  • Oil and Gas Royalties in West Texas
  • Oil Rights in Texas
  • Oil Rights in the Permian Basin Texas
  • Oil Rights in the United States
  • Oil Rights in West Texas
  • Royalties For Sale in the Permian Basin Texas
  • Royalties For Sale in the United States
  • Royalties For Sale in West Texas
  • Royalties in Texas
  • Royalties in The Permian Basin
  • Royalties in the Permian Basin Texas
  • Royalties in The United States
  • Royalties in West Texas
  • Sale of Gas Rights in Texas
  • Sale of Gas Rights in the United States
  • Sale of Gas Rights in West Texas
  • Sale of Oil Rights in Texas
  • Sale of Oil Rights in the United States
  • Sale of Oil Rights in West Texas
  • Sell Mineral Rights in the Permian Basin Texas
  • Sell Mineral Rights in West Texas
  • Sell Oil and Gas Royalties in Texas
  • Sell Oil and Gas Royalties in The Permian Basin
  • Sell Oil and Gas Royalties in The United States
  • Sell Oil Rights in the Permian Basin Texas
  • Selling Mineral Rights in Texas
  • Selling Mineral Rights in The Permian Basin
  • Selling Mineral Rights in The United States
  • Selling Mineral Rights in West Texas
  • Selling Minerals in West Texas
  • Selling Royalties in Texas
  • Selling Royalties in the United States
  • Selling Royalties in West Texas
  • Selling Your Mineral Rights in Texas
  • Selling Your Mineral Rights in West Texas
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