Property Rights and Oil/Gas Exploration in Texas
June 24, 2019
Oil and gas exploration in Texas are guided by two kinds of property rights: the surface estate and the mineral estate. Often, the surface and mineral estate are owned by a single person. However, this isn’t always the case, as property owners sometimes choose to sell one estate and keep the other. However, when transferring property rights, a property owner must explicitly transfer ownership of only one of the two estates. Without this explicit transfer of one estate, both estates will automatically transfer to the new owner of the property. Therefore, anyone seeking to sell a surface or mineral estate in Texas should first consult with an experienced Texas oil and gas attorney for guidance.
How Property Rights Affect Exploration
Under Texas law, the mineral estate is considered the dominant estate. This means that the owner of the mineral estate is permitted to use the surface estate to the extent necessary for oil and gas exploration. In addition, the right to exploration extends to an individual or company (“lessee”) that has obtained a mineral lease from the mineral estate’s owner (“lessor”). A lessee has the right to use a property’s surface to search for and produce oil and gas. Activities permitted under this law include:
Entering and exiting well locations
The construction and use of pipelines
The use of water on the property for production and drilling operations
The general requirements regarding use of the surface by the mineral estate owner may be altered by the deed that severed the mineral estate from the surface estate or the language of the mineral lease. In addition, some places have ordinances that restrict oil and gas activities on property within their jurisdictions. Finally, a lessee's rights can be affected by the accommodation doctrine. The accommodation doctrine applies in limited circumstances and requires lessees to modify their production or exploration efforts to accommodate existing surface uses.
Texas Oil and Gas Attorney
Oil and gas laws are always changing. Therefore, it’s imperative that those involved in the energy industry have reliable, experienced, and knowledgeable legal representation to help guide them through the ever-changing energy landscape. In the areas of oil and gas, it’s particularly important to ensure that all contracts are properly drafted. Oil and gas contracts are sophisticated documents, and it’s important that they be drafted in a manner that ensures the rights and responsibilities of all parties involved. At the Law Office of C. William Smalling, P.C., we are highly experienced in the drafting and review of such contracts, including joint operating agreements, farm-out agreements, master service agreements, drilling contracts, licensing agreements for use of seismic or technical data, and nondisclosure agreements. If you are in need of expert oil and gas legal representation, contact us today for a consultation.