EARTHWORKS

Oil and Gas Leasing

Leasing of minerals occurs in different ways, depending on whether the minerals are owned by private citizens, or federal or state governments. In both situations, the owner of the minerals may be different than the owner of the lands that lie above the minerals. This situation is known as "split estate," i.e., the mineral and surface estates are owned by different parties.

Leasing Public Minerals for Oil and Gas Development

Landowner Notification
The direct notification of individuals who own or lease land located above publicly owned minerals typically does not happen when the leasing of state or federal minerals occurs. Consequently, often surface owners do not realize that the mineral rights have been leased to a company that may use their land to access and produce the oil and gas underneath their property.

Some states do have processes for posting notices about lease sales on state lands. For example, the state agency in Montana will post notices on its web site, in local newspapers and they will send information about leases to a mailing list.

The Interstate Oil and Gas Compact Commission has produced a table that summarizes state oil and gas leasing information, including how the state agencies notify the public about lease sales. This table is available at:

Federal Lease Sale Information and Maps

The BLM posts federal lease sale information and more general maps on various web sites:

Leasing Private Minerals for Oil and Gas Development

When minerals are owned by a private citizen or entity, oil and gas companies must lease the minerals prior to drilling for oil and gas.

A mineral lease is a contractual agreement between the owner of a mineral estate (known as the lessor), and another party such as an oil and gas company (the lessee). The lease gives an oil or gas company the right to explore for and develop the oil and gas deposits in the area described in the lease.

When you (the lessor) sign a lease you essentially become a partner with that company (the lessee). When a company holds a lease to your mineral property, you cannot lease those mineral rights to another company until the lease term with the first company expires. When the lease terminates, all rights to the minerals revert back to the mineral owner.

As with any partnership, open communication is necessary to maintain a successful relationship. A lease may be something that you may have to live with for many years - perhaps the rest of your life. Consequently, it is in your best interest to maintain a business-like relationship.

For more information and tips on leasing your minerals, download or order Chapter 3 of OGAP's landowners guide to oil and gas "Oil and Gas at Your Door?". Also, see the "For More Information" section below, for links to various groups that provide information on mineral leasing and royalty issues.


For more information:

Leasing of Public Minerals

Leasing of Private Minerals

Tagged with: leasing, landowner rights

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