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What is a mineral estate and how does it impact my property?

As a property owner it’s likely you associate the value of your land with what is on the surface, such as home or cropland. Have you considered what is below the surface? When your property sits atop an abundant deposit of minerals, gas or oil, you can sell or temporarily lease the below ground your property.


Mineral rights

Mineral rights are an estate of real property (land), occasionally described as a mineral interest. The rights allow the holder to search for, extract and sell the many natural resources under the surface of a tract of land. These rights are typically attached to property, dating back to the original sale or allotment, unless the rights have already been sold or “severed”. A trip to the local courthouse, where land records are kept, will help you determine if you own the mineral rights to your property.

Selling or leasing the mineral rights

A company may contact you asking to purchase or lease your mineral rights. The process is fairly straightforward; you will receive an upfront payment and then a royalty percentage for the value of materials extracted and sold, in exchange for use of the land for a predetermined length of time. If the company is going to drill into the ground you will be contacted with a proposed location for drilling and they will likely pay for damages caused by the drilling. Many of these things are negotiable.

Existing mineral owners in Pennsylvania

A new bill that impacts current mineral rights owners is making its way through the Senate. The bill is proposing a change to the longstanding principle that leases on non producing wells expire automatically. The change will allow oil and gas companies to restart inactive leases without getting formal consent from landowners.

There are numerous factors that play a role in the sale or lease of mineral rights and this is a brief summary of the process. Before committing to anything, make sure you understand what you are agreeing to.

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