I own property next to oil companies that are extracting oil from under my property am I entitled to royalties
My dad owns property in Texas on the Barnett Shale. There are gas wells all around, even in the adjoining property. Is he entitled to royalty checks since the gas this well is pumping gas from under his property as well? He does own the mineral rights.
Attorney answers (3)
Texas subscribes to the rule of capture. By this I mean that the remedy that a mineral interest owner has for being drained by a neighbor is to drill his own well and thus "capture" the transient oil and gas from under his land before it flows out of his neighbor's wells. Royalties are only payable in the event that your dad has leased his minerals to an oil and gas company, and that company has obtained oil and gas from under his lands, or lands that have been pooled with your father's land.
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If your dad owns the mineral rights related to that real estate, he needs to find someone to lease and develop the mineral interests. The other wells you are referring to are generally allowed to "drain" the interests of other owners, with some exception.
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Stephen Boyd Moon
Reputation Level 3
Answered over 2 years ago.
Oil / Gas Attorney in College Station, TX.
I agree with the answers provided by the two attorneys above. That is, unfortunately, you are not entitled to any of the drainage or production that may or may not be coming from your land. While this may appear bad, it may in fact be a blessing in disguise. Often, production companies are unwilling to stake their claim on a unproven area (or "wildcat") and even if they are interested in your lands may not pay a premium price. Having a producing well next to your property may give other producers the confidence and incentive to lease your lands. I recommend that you get in touch with an oil and gas attorney that has connections with landmen and production companies and to see if there might be someone interested in leasing your lands.
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Other answers (1)
Tom Fisher
Answered by a user, almost 2 years ago.
The answers already given are correct, but there are a few other matters to consider.
Knowing whether gas is coming from under your father's land would require review by a geologist and/or petroleum engineer. Your father's land could be separated by faults or another geological feature. At some point, a reservoir ends or is no longer producible. The end could be occur before your father's land is reached even though a well is nearby. Neither a lawyer or landman can tell where a reservoir ends unless he has a geological or engineering report. Getting a report is usually not inexpensive.
If possible, get the names of the operators of the nearest wells. The operator's name is supposed to be on a sign posted near the well. Contact the respective land departments or landmen of the operators and ask if any of them is interested in leasing your father's land. If any new wells are being drilled in the area, do the same thing for the well's operator -- not the company whose rig is being used. Also, ask your father's neighbors who leased their land, and then contact the lessee or the landman who obtained the leases. If your father's land appears to be productive, it is likely that someone will want to lease it. You may also find a lease broker who will look for a lessee for your father's land. A broker will want compensation if a lease is taken. The compensation may be paid by the lessor or lessee. Some of the landmen who took leases on neighboring land may also act as lease brokers or know of lease brokers who are active in your neighborhood. Some of the drilling blocks may have even been put together by brokers who flipped the leases for their own benefit and not as agents for the lessee. BTW, some leases are taken in the name of the landman or landman company as a screen for the actual owner. Contacting these landman should put you in touch with the actual owner.
If this is unsuccessful, your father may be able to seek forced pooling at the Railroad Commission. This is time-consuming and expensive, and your father will want to contact an O&G lawyer with experience in forced pooling.
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