Logic behind mineral leases and oil gas royalties

The term mineral is comprehensive and may include anything from fossil fuels like natural gas, oil and coal to metals, rocks and even gravel, sand or peat. The rights to extract minerals are safe with the owner of the mineral rights, which gives rise to possibility of oil gas royalties etc.

Mineral leases are formal agreements between the owner of mineral rights and mineral development company for mutual benefit. Mineral owners go for oil gas royalties in lieu of leasing their mineral rights to the mineral development company.

Mineral leases are highly defined legal documents that specify the terms between the land owner and the mineral development company. These leases elaborate on which all minerals may be extracted, how much the extraction is going to take place, how long is it going to continue and what will be the compensation for any damages to the trees and crops on the surface.

Be Fully Knowledgeable About Mineral Rights Laws

As a property owner in the USA you need to know all about mineral rights laws. In most other places it doesn’t matter whether there are minerals lying under the surface of your property. It all belongs to the state anyway! So you must know firstly what all constitutes the word “minerals”. All metals and ores, non-metals, fossil fuels and sand, marl, peat and even rocks are all minerals. If there are minerals and you can find a buyer then you need to draw up a lease agreement with the buyer. Once the agreement is signed you get a compensation called the lease bonus. Once say the oil production starts you get the mineral royalty. There are laws governing these mineral rights and royalties in every state. Your oil and gas attorney will guide you about the laws and help you with the lease. Make sure you get full value for your property.

A brief on Colorado mineral rights

Colorado mineral rights were legalized in 1916. From then, the surface rights were legally considered as distinct from mineral rights. Different parties could indeed own or have the lease rights with respect to the surface rights and the mineral rights for the same tract of land. The two were then legally separable and could be sold or leased in the "severed" condition.

Simultaneously the state considered favorably the right of the party to "access" the land it was legally in possession of. Therefore, if you own the surface rights to a property, whereas a company owns its mineral rights, you have to grant access to the company to extract minerals from your property.

Like US mineral rights and legalities applicable in other US states, when companies dig oil wells in your property, they are required pay you for damages caused to your property due the drilling. The company also requires to pay you in case its pipelines run across your property.