You are here:

Oil/Gas/oil and gas lease


I recently purchased a small property in Texas and was told by both the realtor and the lender that the land minerals were owned by the State of Texas.  They explained that the land owner becomes the "agent" for the state and a percentage of the royalties from lease bonuses and profits from drilling go to the land owner.  I know there is gas under the land but the chances of drilling are pretty slim.

That said...After closing it has come to my attention that there is an active lease on the property.  This was not disclosed to me in any shape or form before or during closing.  The lease is between the former owner acting as an agent for the State of Texas and a local oil and gas company.  The seller will not provide the lease and we are doing a search for it right now.  My realtor tells me now he could have been wrong and he thinks I may now be bound by the terms of that lease which he thinks does not expire until 2015.(This is based on him speaking with an adjacent land owner who says adjoining land owners entered this agreement together).  He now thinks that the prior land owner can still control the lease even though the state owns the minerals.   Can a prior land owner still be an agent for the state after he sold the property?  My lender tells me no but I cannot seem to get a correct answer.  I am now the surface owner and I was not able to negotiate any part of the lease that addressed surface damages etc.. We are set to begin construction soon and I am worried about sinking money into the property that I may not actually have any control over.  

Thank you for your time.

If the previous owner owned any of the mineral rights under the land that was sold, and didn't reserve them in the conveyance of the land to you, then you are now the owner of those minerals and are subject to the lease that was signed. There is no "controlling" of the lease by anyone, but you are now subject to its terms if the minerals were conveyed with the land. If a producing well is commenced during the lease term, you will be paid according to the terms of the lease.

If in fact the state owned the minerals then the landowner could not have conveyed them to you. It may be correct that you will receive some royalty even if you don't own the mineral rights in some areas of Texas. You'd want to consult a Texas Oil and Gas attorney on that for more details.

If you're worried about them drilling on the wrong part of your land you can call the lessee and see if they even plan to drill before worrying about that. In most cases a lessee (no matter who owns the mineral rights) will try to contact and work with the landowner prior to commencing a well. In fact, in many cases the landowner will receive a "bonus" of their own of anywhere from $1000 to $10,000 or more to cover any damages that may occur. Often landowner's are able to negotiate other terms as well, such as improvements to roads, replacing damaged fences, crops, etc.

It's also quite possible that even though the minerals under your land may be included in their drilling unit, the well may be drilled on a neighbor's land instead of yours if the mineral rights under your neighbor's land are included in the same unit. It really depends on where their geologist tells them they need to drill.

Hope this helps you out.
Frederick M. "Mick" Scott CMM RPL
The Mineral Hub  


All Answers

Answers by Expert:

Ask Experts


Frederick M. Scott


Oil and gas leasing, lease negotiations, how to best deal with the oil and gas companies or their representatives, buying/selling mineral rights, forced-pooling, correlative rights, deeds and conveyances, and "post-production" costs. I am most experienced with Oklahoma properties and laws, but am able to answer questions concerning other oil and gas producing states in many cases.


I am a Certified Professional Mineral Manager (CMM) certified by the National Association of Royalty Owners (NARO) in Tulsa, OK. I am also a Registered Professional Landman (RPL) with the American Association of Professional Landmen (AAPL). I have managed my family's oil and gas properties in Oklahoma for over 10 years and have dealt with many landmen, title analysts, attorneys and other oil and gas professionals in the process. I have written several articles which have appeared in various oil and gas industry magazines and newsletters. I have negotiated and drafted leases, prepared deeds, affidavits, and other legal instruments relating to my own minerals, as well as performed title, legal research, and curative work for same. I have acquired a good deal of knowledge on the subjects of oil and gas law, mineral appraisal, and landwork over the past ten years, and also worked as a professional landman and lease buyer for a time. I've seen the business from "both sides" and therefore feel confident I can help out most of the folks who ask questions in this forum.

National Association of Royalty Owners (NARO); American Association of Professional Landmen (AAPL)

National Association of Royalty Owners "Action Report" (ROAR); NADOA Magazine, The Mineral Hub, Landman Magazine, and several royalty owner association group's newsletters.

Certified Mineral Manager (CMM), Registered Professional Landman (RPL)

©2016 All rights reserved.