What is Mineral Rights Leasing?

by : Mary Ann Porsuelo

The importance of energy, oil, coal, and other minerals and natural resources is very evident throughout the world. The demand for commodities such as oil and gas is increasing and many energy and mining companies are on the lookout for land and properties rich with minerals. With energy and mining companies looking and mineral rights owners possessing the potential to get a big profit, mineral rights leasing is undeniably a growing trend in the real estate market and energy/mining industry.

But what is mineral rights leasing all about?

A mineral rights lease is a formal agreement between two or more parties where one party gives the other the right to make use of the minerals in the property involved. In a situation between a mineral rights owner and an energy and mining company, a mineral rights lease is where the owner of the land and/or mineral rights gives the energy and mining company to drill or mine away the minerals underneath the ground.

The mineral rights owner gets benefits in return, of course. The mineral rights owner can get a bonus payment, royalties for every product (that resulted with the minerals) sold, and any other conditions that both parties have agreed to in the contract.

Mineral rights leasing is a complicated matter. This is because it doesn't just concern the mineral rights owner and the energy/mining company. In some cases, it concerns the surface rights owner who may not be necessarily be the mineral rights owner.

The mineral rights owner may not necessarily be the surface rights owner for the particular reason that mineral rights are not the same as surface rights. Both are different from each other. While surface rights refer to the rights to work and operate on and above the surface, mineral rights pertain to the rights used to explore and produce the minerals below the surface.

In cases wherein the surface rights owner isn't the mineral rights owner, one would have to speak to both the owners to get permission to operate on the property for the minerals. While the surface rights owner may not have any say in the operations to extract the minerals, it is still his/her property that will be involved. It is his/her property that will be bombarded with big machines and workers. Disagreements and disputes may erupt before and during the mining operations so all parties should be accounted for. It is wise to be specific of every detail involving all parties' conditions in the mineral rights lease to prevent future problems.

As implied by the definition of mineral rights leasing, this is no simple matter. Mineral rights leasing is complicated from the start to the end of the operations. The contract is a very big deal, and legalities have to be satisfactory for all parties to be in agreement. When problem comes before the parties about the rights of each one of them, it'll be the contract or lease agreement that'll steer them all clear. Make sure to consult lawyers regarding mineral rights leasing. Asking for help from geology surveyors and real estate agents is also recommended.