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Gas and oil rights ownership overview

California property owners who have been approached by an oil or gas company about their mineral rights may be unsure what to do. They might not even understand what these rights are or what they mean. When faced with an offer to buy those rights, many owners may feel confused and not understand exactly what will happen if they sign them over. These are not uncommon thoughts and feelings. This whole legal area can be confusing.

To make it simpler, MineralWise explains that in general, the person who owns the land owns the mineral rights. However, it is important for landowners to check to be sure because, in the past, a previous owner may have sold the rights. If an owner is approached by an oil or gas company, this company is likely looking to secure an oil, gas and mineral lease.

This lease gives the company the right to drill for oil or gas and to install a well. In addition, they get the rights to any oil or gas they extract. The property owner, though, also gets something from the deal. They get paid an upfront payment along with royalty payments for any oil or gas extracted.

The Huffington Post notes that if the oil or gas company never drills, the lease expires and there are no payments made. The mineral rights would then go back to the property owner. If the lease is not void through inaction, the oil or gas company may transfer the right to drill to another company. 

 

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