How Mineral Rights are Sold or Leased

When mineral rights are sold, they can then be re-sold time and time again, over generations. At any point, the owner of the mineral rights will have “a right to exploit the property” (“Mineral Rights”), leaving the seller or any future surface owners to deal with the consequences of mineral exploitation. When mineral rights are sold, they can “involve all mineral commodities (known or unknown) that exist beneath the property, or, the transaction can be limited to a specific mineral commodity (such as “all coal”) or even a specific rock unit (such as the “Pittsburgh Coal”)” (“Mineral Rights”). Whoever owns the mineral rights also has a right “to enter the property and remove the resource at some future time” (“Mineral Rights”). The initial property owners who sold the mineral rights will receive some compensation for the sale; however, they may not necessarily be the one to deal with the consequences. Future landowners, at any time, may be subject to increased noise pollution, truck traffic, or other industrial development that is associated with mineral exploitation or extraction.

The owner of the mineral rights also has the ability to lease them out at any time. Leases typically occur when the company looking to exploit the minerals is unsure of what kind, how much, and the quality of any minerals that lie underground (“Mineral Rights”). Typically, a mineral company pays an upfront fee to the owner of the mineral rights to conduct tests (“Mineral Rights”). This upfront fee can be thousands of dollars per acre leased, paid to the owner of the mineral rights. Oftentimes, the property in question is rural, meaning that landowners can own hundreds or thousands of acres. This can translate into an initial payment of hundreds of thousands of dollars, or more. The tests conducted determine if any subterranean mineral deposits exist, how much of the mineral exists, and the quality of the mineral. In the case of oil or natural gas, if resources are found and drilling commences, the mineral rights owner typically also gets royalty payments, ranging from 12.5 to 25 percent of the oil or natural gas value at the wellhead. For property owners above the Marcellus Shale and other shale deposits, sometimes it can be hard to say no to the wealth that lies just below the surface (“Mineral Rights”).