If you own an interest share in the mineral rights of oil production, then you are probably enjoying a steady stream of oil royalties in your portfolio. With high stakes values, a large number of players, and hundreds of pages of legal contracts, sometimes it can be difficult to fully understand your role in the process of oil production. In this article, we are going to outline how to identify the rights that you have, as an oil royalty owner.

Your Rights as Mineral Rights Owner – The Paperwork

Oil and gas agreements are not required to be made public, and the highly individualized nature of mineral rights agreements make it difficult to identify a “standard” handbook of mineral rights owners’ rights.

With this in mind, there are a few very critical pieces of paperwork that you should always have available. It is also advisable to seek expert advice in order to review the following documents.

A Copy of The Deed

The deed which defines your ownership rights of the property’s subsurface is crucial in defining your asset. If you own a fee simple estate, then your surface rights and mineral rights are usually defined in the same deed. If it is a split estate, then the mineral deed is no different than a surface rights deed, just separate. Mineral deeds are public records and can be obtained either online or with a local courthouse.

A Copy of the Lease

Once the lease is signed, it becomes the most important document in a mineral rights agreement. Here, the rights of the surface and mineral owners are clearly defined as they affect an oil company’s pursuit in exploring and extracting minerals. It is crucial to understand the time periods and compensation associated with an oil company’s permission to enter the property. Although oil and gas leases are not public records, a copy must be filed with the local courthouse and the records can be obtained at a later date.

A Division Order

Oftentimes, oil wells are divided between multiple mineral rights owners. This makes it a requirement for oil companies to send out a division order, or a division of interest, to lay out the percentage ownership and rights for each mineral owner. Division orders must be signed and returned to the oil company, but mineral rights owners should absolutely keep a copy for their records.

Any Communication with Oil Companies

Lastly, it is always a good idea to print or save any copies of communications with an oil company. As a mineral rights owner, you want to be up to date (and know the history of) all of the happenings of the operations in which you have a stake in. For the worst-case scenario, copies of all oil company communications can help in the court of law if you feel as if your rights have been violated as an oil royalty owner.

In the United States, there are hundreds of thousands of mineral rights owners. Of course, some individuals may be more actively aware of their mineral rights if their property is earning them monthly oil and gas royalties. If you own mineral rights or are looking to purchase mineral rights in the future, then there are plenty of resources available on how to find mineral rights owners and get into contact with them in order to learn, converse, and exchange information.
In this article, we will outline a few great resources. Resources on how to find mineral rights owners and connect with them both online and locally.

Online Mineral Rights Forums

Most notably, the popular Mineral Rights Forum (www.mineralrightsforum.com) is a great online conversation space for mineral rights owners in the United States. The website was formed in 2009 and is an amazing resource to ask specific questions about your individual situation. You can also browse through the hundreds of questions already answered over the past decade. The forum is free of solicitation, so users can find information without anything in return.

Minearlrightsforum.com is probably the largest and most credible source for digital answers. However, there is also more information scattered around the web. Websites like reddit.com, Quora, and Yahoo Answers. They all have large backlogs of helpful information on how to find mineral rights owners across the country.

Reaching Out to Speak with Mineral Rights Owners Directly

Are you struggling to find the answers you need? Would you simply prefer to have a conversation with a real person? Then online mineral rights forums may not be the best course of action. There is no requirement for mineral rights transactions to be public. With that, it may still be possible for you to find mineral rights owners in your area. Starting having conversations with them.

How to Find Who Owns Mineral Rights

Websites such as Mineral Holders (https://www.mineralholders.com/) take readily available information and store it into their online database. Although the information is not complete for the whole country, the website has probably the most comprehensive list of mineral rights owners in Texas. Website visitors can break down mineral ownership by county and can also search for specific individuals or companies that may own shares.

There are many situations in which someone may ask, “How long do mineral rights validity last?”. Sometimes, an individual may inherit mineral rights from someone deceased, only to be left with unexpected taxes and a whole lot of questions.

In other cases, abandoned residential and commercial plots can be orphaned, leaving former owners to wonder if they are entitled to the property. In this article, we will explain how long mineral rights last and what that means for future owners.

Mineral Rights Last as Long as You Do

If you own mineral rights, they are yours. You own them until the day you die, that is unless you give them to someone else. There are three ways mineral rights are transferred: as a sale, as a gift, or in a will in the event of a death. Mineral rights are just like any other piece of property. As the rightful owner, you have the right to it so long as they are yours.

Does a person or a business were to own mineral rights and then fail to pass them to another party? then the property is considered abandoned. This is going to happen if a person dies or simply forgets they own the property or if a business were to cease operation but fails to sell its land.

Abandoned or Unclaimed Mineral Rights

In America, mineral rights laws vary from state to state. For the vast majority of states, however, abandoned or unclaimed mineral rights are going to eventually default to the current surface rights owner. This can take over 10 years, although is only usually a handful, depending on your location.

Conclusion

In conclusion, it is always important to do and keep your paperwork in order. If you own mineral rights, you own them until they are transferred from you in business or in death. Do you intend to bequeath your mineral rights to an heir? Then, it is important to make sure that everything is in order.

If you have further questions about mineral rights validity, feel free reach out to us here.

A split estate is defined as an “an estate where the property rights to the surface and the underground are split between two parties.” Split estates are unique, as the United States is one of the few countries in which individuals can legally own the property below the surface of the earth. In this article, we will go into detail for a full understanding of split estates as they relate to oil and gas drilling.

How is a Split Estate Created?

Whenever land is purchased, if the new owner owns the surface and subsurface rights, then it is known as a “fee simple estate.” If that owner were to go off and sell the subsurface rights to another individual or entity, then it becomes a “split estate.” The estate is essentially split into what are known as “surface rights” and “subsurface rights” which can also be referred to as the “mineral estate.”

The Different Types of Split Estates in the United States

One of the most famous early examples of a split estate in the United States was created with the Stock Raising Homestead Act of 1916, in which the government retained mineral rights below 70 million acres of newly privatized surface land. Since then, there has been an endless number of possible split estate ownership combinations. For the most part, split estates are split between private parties, state governments, or federal governments with each entity controlling one or both parts of the property.

Mining on a Split Estate

If a mineral rights owner wants to explore and produce valuable resources from a split estate, then they must notify the surface rights owner. The subsurface owner issues a “Notice of Intent to Locate (NOITL)” to the surface rights owner which will allow the claimant to explore the property and stake mining claims for 60 days after a 30 waiting period.

What Income Taxes on Oil and Gas Royalties are Paid

A wise man once said that there are two absolute certainties in life: death and taxes. Yes, unfortunately, if your mineral rights are earning you a nice oil and gas royalty paycheck every month, those earnings are subject to taxation. In this article, we will outline the taxes on oil and gas royalties that are or are going to be deducted from your paycheck.

Federal Income Tax on Oil and Gas Royalties

Any money that is headed into your bank account is going to be considered income. Oil and gas royalties are no exception. Therefore the standard federal income tax on oil and gas royalties will be deducted when you go to file your taxes. Depending on your income bracket, this could be anywhere between 10 and 37 percent of your income.

State Income Tax on Oil and Gas Royalties

In the United States, tax laws between individual states have a large range of policies. Certain states, like Texas, Wyoming, and Nevada do not have a state income tax deduction. Most states, however, will claim a small percentage of your income with a state income tax. The amount allocated is either a flat rate, like in Colorado and Pennsylvania amongst others, or a percentage of your income based on your total earned each year.

Oil and Gas Royalty Bonus Income Tax Rates

Although the monthly income from your oil and gas royalties are considered as normal income, bonuses received during the sale and signing process are classified as a separate kind of earnings. Although they are taxed at roughly the same rate, if you receive a bonus signing rate of anything above $600, you will have to file that income separately from your monthly oil and gas royalty income.

Tax Deductions for Mineral Rights Income

When it comes time to do your taxes on oil and gas royalties, you’ll want to make sure you add up all of your deductions as they relate to your oil and gas royalty income. Depending on your involvement with the extraction process, you may be eligible for deductions on marketing, state income, severance, depletion allowance, legal, professional, or shipping expenses. Consulting a tax professional will be the best way to explore and deduct the highest available amount from your annual taxes on oil and gas royalties.