Texas mineral rights have a long history, with its beginnings in the private land titles in Texas emanates

from Spain and, successively, Mexico, the Republic of Texas, and the State of Texas. Under the jurisdiction of Spain and Mexico, metals and minerals taken from the surface were governed under separate laws. And, in the Constitution of 1866, the state released to the landowners the option of acquiring the metals and minerals therein. Since this time, Texas adopted the practice of mineral rights ownership, but it was not until the Relinquishment Act of 1919 that allowed the distinction between surface and mineral owners. The oil boon started with the first oil well, Spindletop, in Beaumont in 1901. Two-thirds of the counties in Texas produce oil or natural gas for mineral rights owners. Mineral rights in Texas may be produced by the owner or leased to an oil and gas company for production. The major oil and gas fields in Texas include but are not limited to Eagle Ford Shale and Granite Wash. Minerals rights concern the ownership of minerals below the surface. Owners of such rights have the option of acquiring the minerals themselves or to delegate this action to a third party (i.e. an oil or gas company) by signing a lease agreement. In Texas, the owners of these rights then receive a royalty from the oil and/or gas produced on the land. Surface rights, those that deal with the ownership of physical property of above ground, are separate from these mineral rights. Eagle Ford Shale, for instance, is a hotbed of mineral deposits in Texas. This shale is the primary source for the oil and gas areas in South Texas, such as the Austin Chalk formation, and extends as far as the oil fields of East Arizona. Not until recently has the Eagle Ford Shale been thought to be economically viable. Due to new technological advances, such as hydraulic fracturing, drilling of the Eagle Ford Shale is now possible; however, because of the shale’s high concentration of carbonate, drilling in the Eagle Ford Shale does not mean its resources would deplete to nothing. The shale’s natural permeability produces impressive amounts of oil and natural gas. This makes the Eagle Ford Shale highly desirable for economic opportunities for the oil and gas industry, as well as for those who own mineral rights.

Owners of mineral rights also have the opportunity to sell oil and natural gas royalties. The process of selling both rights is a similar one. The big difference between the two is that a royalty from an oil or natural gas company can be sold without the sale of mineral rights. This all depends, however, on the lease negotiated between the owner of the mineral rights and oil and natural gas company. When the oil and gas company finishes or halts production on the surface, the mineral rights owner can sign a new lease, if the Held by Production (HBP) timeline ends. HBP means that an oil and natural gas company has drilled a well capable of viable commercial production and the lease in question is held past its primary term based on said production. Eventually, a royalty payment is made to the mineral rights owner. In Texas, royalties can be negotiable and depend on a number of factors, including the type of mineral and deposit.

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