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A lease is an agreement that gives the mining company the right to enter the property, conduct tests and determine if suitable minerals exist there. To acquire this right the mining company will pay the property owner an amount of money when the lease is signed.
Most leases have two terms that affect their duration. The primary term is a fixed period of time (e.g. five years) during which the lessee has to achieve a certain result.
These can range from a couple of years to more than 10 years. However, there can be many other variables from one lease to another and from one region to another that are buried in the fine print. You certainly can't assume upfront that you will regain your mineral rights.
Nearly all addendum clauses provide for an extension of the lease beyond the primary term end date and into the secondary term if there is actual and ongoing production of oil or gas. It is a common occurrence that a lease expires on its terms, but has never formally been released or surrendered by the lessee.
Production Month Oil is often paid 2 months in arrears, while natural gas (and products) generally are paid 3 months in arrears. Oil & gas royalties are paid monthly, consistent with the normal accounting cycle of the producer, unless the obligation does not meet the minimum check requirement for that particular state.
Mineral rights often include the rights to any oil and natural gas that exist beneath a property. The rights to these commodities can be sold or leased to others. In most cases, oil and gas rights are leased.
An exception occurs when the seller stipulates that they are only selling surface rights and will retain mineral rights. Alternatively, an owner could decide to sell the mineral rights on their property, which means that they keep the surface rights.
”Mineral rights” entitle a person or organization to explore and produce the rocks, minerals, oil and gas found at or below the surface of a tract of land. For example, it is possible to sell or lease rights to all mineral commodities beneath a property and retain rights to the surface.
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