Surface and Mineral Estates in Texas
One’s rights regarding oil and gas exploration in Texas are primarily dictated by two distinct sets of property rights—the surface estate and the mineral estate. While these two estates are often owned by the same person in the case of a single piece of property, it is common in many areas of Texas for a mineral estate and surface estate to be owned by different people. This severance of the mineral estate and surface estate occurs when a property owner sells the surface and keeps the minerals. However, if a property owner fails to explicitly limit the transfer of ownership to the surface estate or retain the minerals when selling the surface, then the mineral estate will automatically be included in the sale.
Which Estate Is Dominant?
In Texas, the mineral estate is the dominant estate, which means that the mineral estate owner may freely use the surface estate to the extent necessary for the exploration of the oil and gas beneath the property. This right may be also exercised by an individual or company (“lessee”) that has taken a mineral lease from the owner (“lessor”) of the mineral estate. Lessees have the right to use the surface for the purpose of oil and gas exploration and production. Examples of this right may include activities such as:
Entering and exiting well sites;
Building and using pipelines; and
Using water on the leased property for production and drilling operations.
Limitations and Exceptions
The rules regarding use of the surface by the mineral estate owner or lessee may be altered by the terms of the mineral lease or the deed that severed the mineral estate from the surface estate. Some cities also have ordinances that restrict gas and oil activities on property within their jurisdictions. In addition, lessee rights may be affected by a legal doctrine known as the “accommodation doctrine.” This doctrine, which applies in limited circumstances, requires lessees to modify their exploration or production operations to accommodate existing surface uses.
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.