The information provided on this page is for general informational purposes only and does not constitute legal, financial, or investment advice. Oil and gas laws, mineral rights regulations, and royalty structures vary significantly by state and jurisdiction. While we strive to provide accurate and up-to-date information, no guarantee is made to that effect, and laws may have changed since publication.
You should consult with a licensed attorney specializing in oil and gas law in your jurisdiction, a qualified financial advisor, or other appropriate professionals before making any decisions based on this material. Neither the author nor the publisher assumes any liability for actions taken in reliance upon the information contained herein.
In the United States, mineral rights can be extremely valuable in earning oil or gas royalties. However, when it comes to selling your property, the documentation may cite “conveying” mineral rights to the new owner as a part of the agreement.
If you are unclear what this means, then you’ve come to the right place. In this article, we are going to define what it means to convey mineral rights and outline some scenarios and benefits in which conveying or retaining these may be best.
The Definition of Conveying Mineral Rights
In legal terms, “conveying” is a term used to describe the sale or transfer of a property. In a split estate, landowners can choose to convey or retain their rights separately from a property’s surface rights. Essentially, when working with them, there are three basic ways in which property can be conveyed. They are as follows:
- Conveying surface rights, while retaining mineral rights.
- Conveying mineral rights, while retaining surface rights.
- Or, conveying both mineral rights and surface rights to one or separate entities.
The Benefits of Conveying It
If you choose to sell your mineral rights, then that may earn you a nice paycheck. Plus, if you sell these rights on a parcel of land that is producing oil or gas (or will be in the future), then you may be able to earn a royalty interest on the future sale of resources.
In a fee simple estate, the sale, or conveying, of mineral rights is tied in with the surface rights. Therefore, it is commonplace that the sale of the property also involves the sale of the property’s subsurface. However, in a split estate, it is possible to convey your mineral rights while retaining your surface rights.
The Benefits of Retaining It
Because they are valuable, obviously, there are also benefits in retaining them (rather than conveying them) when selling your property. In the case of a split estate, surface rights can be sold for a large profit, while these rights are retained for future earnings. If you still own your mineral rights, then you can explore an oil and gas lease as a great way to earn royalty interests from the resources produced and sold.
If you have further questions, feel free to reach out to us here.
