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Comment by Eric Camp on July 8, 2011 at 2:55

Krkyoldhag,

 

Generally speaking, from the situation you described, your options depend on a number of factors - what does the lease say? are a 2000 foot right-of-way and 5 acre pad site "reasonably necessary" for the operator to produce the minerals under the tract? is the operator going to use the right-of-way or pad site to produce minerals outside of the tract (or unit the tract is pooled into)? do you have an existing use of the surface? if so, are there reasonable alternatives the operator could take to accommodate your reasonable use and still produce the minerals?

 

Because of the complexity of your situation, I strongly recommend that you speak with an attorney to discuss your options. 

Comment by Krkyoldhag on July 7, 2011 at 16:33

Pretty much the O&G company attorneys just told me  this is what we going to do, stuff it.  I own the land (surface) where they are going to take right of way 2000 feet and 5 acres of pad..No agreement with me was reached..theyjust said this is the deal..   What are my rights?  I feel that the amount offered per acre is way under market value of the land and that cutting across land in this manner will destroy timber, and the privacy of the place.  I complained thru attorney and pretty much seems like they are going to pay me 1/3 of market value and do just what they please.  They said we aren' tbuying the land..nope..they sure aren't  but they are taking it for use for as long as there is production on this site.  What are my options?  Any?

Comment by Eric Camp on September 8, 2010 at 0:30

Actually, in Texas of what "minerals" the mineral owner owns can be fairly complicated.

Look at the instrument severing the "minerals." If it says "oil, gas, and coal," then the party getting or keeping the minerals obviously owns the oil, gas, and coal. But if it says something like "oil, gas, and other minerals," then there is some ambiguity as to what constitutes "other minerals?"

Until 1971, Texas used the "exceptional characteristics test," which classifies as minerals those substances that possess exceptional or peculiar characteristics that give them special value. In addition, whether the recovery of a substance would destroy the surface was considered as a "factor which is used with others.

In the 1971 Texas Supreme Court case of Acker v. Guinn, the Court adopted the "surface-destruction test." Under this test, "[u]nless the contrary intention is affirmatively and fairly expressed, a grant or reservation of 'minerals' or 'mineral rights' should not be construed to include a substance that must be removed by methods that will, in effect, consume or deplete the surface estate."

The surface-destruction test proved hard to apply so in 1984 the Texas Supreme Court case of Moser v. United States Steel Corp., the Court adopted the "ordinary and natural meaning test." Under this test "a severance of minerals ... includes all substances within the ordinary and natural meaning of that word, whether [or not] their presence or value is known ..." However, the Court required compensation from the mineral owner to the surface owner for surface destruction, unless the substance was specifically defined as a mineral in the grant or reservation.

The Court stated two exceptions to the new ordinary and natural meaning test. First, substances that Texas courts had previously held to be non-minerals as a matter of law would continue to belong to surface owners. Among these, the Court specifically identified building stone and limestone, caliche and surface shale, water, sand and gravel, near surface lignite and coal, and near surface iron-ore. And second, the Court announced that it would apply the new rule prospectively only, to deeds executed after June 8, 1983.

Therefore, surface and mineral owners should review the instruments either conveying or reserving the minerals to attempt to determine who owns near surface coal. There is a good chance that many surface owners who think they own no minerals under their tracts actually own the near-surface lignite or coal.

Comment by True Texan on September 7, 2010 at 14:34

Oh my - It sounds like if you own a ranch or something else nice you better own the minerals under it. What if they find coal or some other minerals that require strip mining? Could you imagine you show up to your property and they are knocking down all of your trees to strip mine your ranch? Then the foreman of the project tells you the $5,000 check is in the mail to you and for you to be happy. I know around interstate I-45 in Buffalo, Texas there is a very, very large coal strip mine. I would never have thought that coal was in that area. If you get the chance you can check it out using Google Earth. The mine is a little bit North of Buffalo, Texas and is right next to the West side of I-45. I have never seen drag diggers that big in my life, except for on TV.

Comment by Eric Camp on September 7, 2010 at 3:11

John,

That excerpt only applies where the surface owner owns all or a portion of the mineral estate and would therefore be signing an oil and gas lease.

- Eric

Comment by king john on September 6, 2010 at 0:43

interesting read eric, thanks for posting it. i do have a question regarding this excerpt...
" If a surface owner is concerned with future surface operations, the surface owner should address the issue when negotiating the oil and gas lease "
why would the surface owner be involved in the mineral leasing activities?
kj