Mineral Rights

Definition - What does Mineral Rights mean?

Mineral Rights are the property rights owned by the mineral interest owners to exploit the permitted oil and gas lease or any other mineral lease for the extraction of minerals beneath it. Most of the time people get confused and consider mineral right ownership to be same as property ownership, however, this is not true as both are different and have different meanings. Mineral Rights strictly corresponds to minerals present in the earth's surface below the real estate property of a person whereas property ownership or real estate property ownership is the hold of property above the surface of earth.

Petropedia explains Mineral Rights

The term mineral corresponds to any minerals that are found under the earth's surface but the condition for them to be called minerals is that they should be traded on the world’s trading indexes. This is one reason for terming oil and gas (hydrocarbons) as minerals. Thus, if oil and gas or any other minerals are produced or extracted from the earth's surface within the vicinity of the property of an owner, he would be considered as the mineral rights owner and as per law he has the right to exploit the minerals.

There are five major elements associated with the mineral rights:

  • In order to exploit or maximize the production of minerals, the right to use as much of the earth's surface is permitted by the land activities permit approval authority.
  • If any further explorations are discovered on a piece of land, the right to convey the rights further has to be granted.
  • All the interest owners have the rights to receive royalties based on the sales of minerals
  • Rights to receive bonus considerations are granted.
  • If any delay happens from the operators end once the permit has been issued, the right to receive delay rentals is also granted.

There are four stages in the mineral right leasing:

  • Ownership type
  • Leasing of the property
  • The division order
  • The royalty check stubs

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