The term "minerals" can be used in a variety of contexts and can vary from state to state. It can include a wide variety of valued natural resources, from fossil fuels (natural gas and oil) to gemstones. Within the Barnett Shale in Texas, when discussing mineral rights or the leasing of minerals, natural gas and oil are generally the minerals of interest.
Mineral rights are the rights entitling a mineral owner to extract a mineral from the earth or allow third parties to do so and then to receive payment, in the form of royalties, for the extraction of specific minerals. Mineral rights are an integral part of property ownership. Mineral property is considered a real property much like surface property – it can be retained, transferred and leased in whole or in part. In most states, it is possible to own the mineral rights of a property without owning the surface rights.
Owning a piece of property does not automatically mean you own the mineral rights. There are many cases where the original owner sold the surface rights, but retained the mineral rights. A search of your deed or property title can disclose whether you own your mineral rights. If your current deed does not specifically discuss minerals, you may need to look back through the deeds of previous owners. This is why title searches are necessary to confirm mineral ownership.
A mineral lease is a legally binding contract that gives an energy company the right to extract and produce the mineral owner’s natural gas or oil. Typically, the owner of the mineral rights is paid a sum of money (the bonus) when such a lease is signed or when title is confirmed. Then, after a well is drilled, the mineral owner will receive a recurring payment based on the percentage of a well’s production and on the amount the operating company is paid for the natural gas or oil, referred to as the royalty. Royalty owner payments are based on a percentage of the gross well production minus the working interest owners’ expenses, this includes gathering deductions.