Re: Your thoughts on mineral rights

Posted by PKurilecz on September 17, 2004 at 16:13:14 from (207.136.56.156):

In Reply to: Re: Your thoughts on mineral rights posted by rustyfarmall on September 17, 2004 at 13:36:48:

Hello All:

I deal regularly with mineral rights in Texas and occasionally in Louisiana.

I'll try to address some of your questions.

In Texas, you start out with what is called the "fee simple estate". In a fee simple estate the owner has ALL of the rights associated with the land. This includes anything that can be done with the surface or the subsurface.

The owner of a fee simple estate can convey that estate with reservations. The owner retains certain rights to the estate. These rights could be timber, water, oil, gas, coal, gravel, iron, whatever.

When a conveyance is made and a mineral interest is reserved, in the conveyance with the original reservation an easement is created that renders the surface estate servient to the mineral estate. This allows the mineral estate rights owner access to the minerals.

Unfortunately, because this easement is created in a contract between two individuals, any dispute between a surface rights owner and a mineral rights owner is automatically a civil matter.

With the easement created, the mineral rights owner does have the right to "reasonable use" of the surface to extract the minerals. Unfortunately, if the surface rights owner believes the the surface use by mineral rights owner is unreasonable, the only recourse is in civil court if negotiations with the mineral rights owner fail.

With respect to the issue of land valuation increasing on the surface owner after oil and gas development takes place, please make sure that this valuation increase is not due to some other matter, such as increasing valuation of surface properties in the area.

If you are a surface owner with no mineral rights to land and mineral development does take place, you can have the acreage that you pay taxes on reduced. What has happened is that the owner of a superior easement on your land has done, has converted your use of the land to his use of the land. If you can document that the mineral owner has taken use of your land (for example, through a survey of the land used by the mineral owner) you can have your taxable acreage reduced. For example, you own the surface rights to 200 acres. The mineral owner develops oil and gas on the land and uses a total of 10 acres for the oil and gas activities. You can then have your taxable acreage reduced to 190 acres as you no longer have use of that 10 acres.

I did this on a piece of property that my family has in Texas when we granted an easement for a power line. Since our activities are limited on this portion of our land, I was able to have our valuation reduced.

A reasonable oil and gas operator will usually automatically pay liquidated damages to a surface owner when oil and gas development takes place. My experience has been to typically pay what the value of the land is for the land that I am using. My typical offer is, that I am using one acre, your land is worth $X per acre, here is $X.

I do want to point out, that to me, my relationship with non mineral surface owners is very important. The last thing that I want is an upset landowner.

With regards to taxation of minerals, generally in Texas no taxes are assessed unless there is actual mineral production. An ad valorem tax is assessed on the value of the minerals extracted as well as the equipment used to extract the minerals.

If there is active mineral production and the ad valorem taxes are not paid, then a sheriff's sale can be held in order to obtain the taxes owed. Just like a sheriff's auction on someone's house where the ad valorem taxes have not been paid, the same situation exists for producing mineral rights. Most oil and gas lease agreements in Texas allow the lessee to pay the lessor's ad valorem taxes if the lessor is in default on the ad valorem taxes. We regularly check this.

Now for Louisiana.

In Louisiana, minerals cannot be severed from the surface estate unless there is active mineral production. After a period of time of no mineral production (it is either 7 or 10 years, I can't remember which right off the top of my head), the mineral rights revert back to the surface owner.

Sorry to be so long winded, but it is a complex problem.

Hope this helps... and just remember, please don't shoot the messenger.

PKurilecz

Follow Ups:

• Re: Your thoughts on mineral rights cannonball 13:06:50 09/19/04 (0)
• Re: Your thoughts on mineral rights ChuckG 08:21:35 09/18/04 (3)
  • Re: Your thoughts on mineral rights PKurilecz 08:19:09 09/19/04 (1)
    • Re: Your thoughts on mineral rights ChuckG 09:29:54 09/19/04 (0)
  • Re: Your thoughts on mineral rights VaTom 06:05:29 09/19/04 (0)
• Re: Your thoughts on mineral rights Logan in S.E. Texas 18:33:13 09/17/04 (7)
  • Re: Your thoughts on mineral rights Dozerboss 00:06:48 09/19/04 (0)
  • Re: Your thoughts on mineral rights Pkurilecz 19:43:12 09/17/04 (5)
    • Re: Your thoughts on mineral rights Dozerboss 22:45:03 09/17/04 (4)
      • Re: Your thoughts on mineral rights VaTom 05:27:04 09/18/04 (3)
        • Re: Your thoughts on mineral rights Dozerboss 11:16:31 09/18/04 (2)
          • Re: Your thoughts on mineral rights PKurilecz 08:43:02 09/19/04 (0)
          • Re: Your thoughts on mineral rights VaTom 06:00:00 09/19/04 (0)

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