Replies to This Discussion

Permalink Reply by BirdDawg, plain ole' idiot on December 27, 2008 at 10:43

SB,
I thought that spudding a well interrupted perscription. Period. No difference in royalty or minerals. Just what I thought.

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Permalink Reply by Spring Branch,mineral owner on December 27, 2008 at 10:50

Think it has to be production in the case of a royalty interest ownership.

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Permalink Reply by BirdDawg, plain ole' idiot on December 27, 2008 at 10:53

I have bought and sold "minerals" on many occasions. Always bought and sold minerals. Knowing they were subject to any existing lease. I still do not grasp the concept of the difference between "royalties" and "minerals".

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Permalink Reply by BirdDawg, plain ole' idiot on December 27, 2008 at 10:55

I buy your minerals, it is subject to whatever lease may be in effect. Then I get the "royalty interest" that the lease specifies. Someone please explain this to me.

Permalink Reply by Bobi Carr ("parker") on December 27, 2008 at 11:09

Bird Dawg,

I would have to agree that a dry hole would interrupt prescription whether a sale of royalty or an out right sale of mineral interest.

I think a sale of "royalties" usually comes into play when a % of existing production is sold. I assume that since this is a common way of conducting business that they have continued in their normal way of conducting business.

If someone buys only royalty interest they don't buy the right to lease should that become an issue in the future.

Royalty acre = 1 acre leased at 1/8th
mineral acre = 1 acre regardless of lease amount

(At least this is my understanding)

Permalink Reply by Spring Branch,mineral owner on December 27, 2008 at 11:11

I have only bought minerals myself, Bird Dog, never sold any. I have been approached recently by royalty interest flippers who had recently bought royalties and, I'm sure, were trying to sell 1/2 of them at a price which enabled them to recoup their entire cost. Never having bought royalties, I asked one of them to explain them. He gave a thorough explanation which at the time I understood , but now I'm a little fuzzy. I know a royalty unit is 1/8 and there are 5,120 royalty units in a section (640 multiplied by 8). After that he lost me. I think I'll stick to minerals.

Permalink Reply by BirdDawg, plain ole' idiot on December 27, 2008 at 11:22

Thanks to Parker and Spring Branch and any others,
I still can not grasp the concept of any difference. Don't take me wrong, I am sure there could be a difference and I just don't understand it. Thanks for ya'lls input. Always greatly appreciated.
I gotta keep digging on this one. Thanks guys.

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Permalink Reply by BirdDawg, plain ole' idiot on December 27, 2008 at 13:46

I still say, if I bought minerals and the are subject to an existing 1/8 lease, I know what I get. If they are subject to a 1/4 lease, I know what I get. I would much rather buy unleased, and then I can negotiate my own lease. Please tell my what is wrong with that scenario.

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Permalink Reply by The_Baron on December 27, 2008 at 19:43

Most all of the rotyalty deeds i have seen refer to buying a royalty in all future production. There does not have to be a current lease. The royalty will prescibe back, just like minerals, but after 10 years of no production (or a successful well test).

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Permalink Reply by The_Baron on December 28, 2008 at 4:59

No, because the mineral owner still retains all powers of leaseing. The mineral owner is entitiled to all monies from bonus payments, rentals, and all other non-royalty payments. The Royalty owner has NO rights in lease negotiations whatsoever. By selling their royalty, The mineral owner is retaining all control over the minerals beneath their land, while selling all or part of the future royalty revenue derived from the land.

Whereas, a owner who sells their minerals give up that control, and maybe even some rights as to the surface rights, depending of course on the deed.

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Permalink Reply by The_Baron on December 28, 2008 at 5:01

CHAPTER 5. THE MINERAL ROYALTY

PART 1. THE NATURE OF THE MINERAL ROYALTY

§80. Nature of mineral royalty

A mineral royalty is the right to participate in production of minerals from land owned by another or land subject to a mineral servitude owned by another. Unless expressly qualified by the parties, a royalty is a right to share in gross production free of mining or drilling and production costs.

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Permalink Reply by The_Baron on December 28, 2008 at 5:02

CHAPTER 4. THE MINERAL SERVITUDE

PART 1. THE NATURE OF THE MINERAL SERVITUDE

§21. Nature of mineral servitude

A mineral servitude is the right of enjoyment of land belonging to another for the purpose of exploring for and producing minerals and reducing them to possession and ownership.

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