What Are Mineral Rights?

What Are Mineral Rights?

 

This term seems to be most often related to oil and gas mineral extraction, though it really covers any raw material that would or could be extracted from below the surface including ores, metals, gold, silver, etc. Depending on what part of the country you currently own land in or are looking to invest, a close look at the short- and long-term potential produces multiple ways that a landowner can benefit or profit from the resources in the ground.

These mineral rights give the landowner a legal basis in which they can sell and profit from the extraction in several different ways. Minerals can be sold outright, they can be leased, they can be developed for production and they also can be sold on a percentage basis. That term is usually considered a “royalty” income and is based on a negotiated percentage in some type of contractual lease or production agreement.

If you’ve been following the news, there is really only a strong interest in oil and gas mineral rights up in the Dakotas. Many energy companies are looking to invest in these areas based on geological studies. With the process of seismographs, these companies can determine the validity of the prospective basin in which they will be exploring.

For the landowner, the importance falls in the process of educating themselves with the standards as each state is regulated differently with varying laws. In North Dakota and most recently on the Mississippian lime play that has grown drastically in the last year, mineral rights are at a premium and have been sold, leased and traded at a rampant pace. There are numerous publications that can be a source of information for any landowner looking to determine their properties “mineral rights” potential:

http://www.investopedia.com/terms/m/mineral-rights.asp#axzz2FcGJHbcS

http://blackbearddata.com/oil-and-gas-royalties-what-they-are/land-ownership-mineral-rights

http://www.geo.wvu.edu/~jtoro/petroleum/Review%203.html#seismic