What’s the Difference Between Mineral Rights and Surface Rights?

Knowing how to properly manage both sets of rights can be beneficial in ensuring you maximize the value of your assets.

If you are a property owner, it is important to understand the difference between mineral rights and surface rights. Mineral rights are a form of ownership that gives the holder the exclusive right to exploit, mine, and/or produce any minerals that may be found on or beneath the property. On the other hand, surface rights refer to the rights of a landowner to use the surface of a piece of land for various purposes, such as farming or construction. It is important to know the definitions and how they differ in value.

Definitions: Mineral Rights vs. Surface Rights

When it comes to understanding the rights associated with owning property, one of the most important differences to understand is between mineral rights and surface rights. While both types of rights can have a significant impact on the value of a property, they also differ in some key ways.

Mineral rights refer to the ownership of any resources that are located beneath the surface of a piece of land. This includes things such as minerals, oil, gas, or any other natural resources that may be found beneath the ground. Generally speaking, mineral rights do not include anything found on the surface itself.

Surface rights, on the other hand, refer to the ownership of any resources located on top of the ground. This could include things such as buildings, crops, trees, fences, roads, and more. While the owner of a property can have both mineral and surface rights, they may also be owned by different people or entities in some cases.

In addition, it is important to note that when it comes to mineral rights, the owner of those rights is generally given certain privileges that are not associated with surface rights. These privileges can include the right to explore for minerals or extract them from the ground.

Difference in Value

Understanding the difference between mineral rights and surface rights is important for anyone looking to buy or sell property. While both types of rights can have an effect on the value of a property, they also come with different sets of privileges and obligations that must be taken into consideration. As such, it is important to take the time to understand these details before making any decisions.

When it comes to leasing or selling a property, it’s important to consider all of the different types of interests involved. Before any contracts are signed, it’s important to make sure that all parties understand who owns what rights and how those rights can be exercised. Knowing the difference between mineral and surface rights is a key part of any real estate transaction.

Key Takeaways

1. Mineral Rights Are Separate from Surface Rights

It’s important to note that mineral rights are separate from surface rights. This means that someone can own the surface of the land, but not the minerals beneath it. Similarly, someone can own the mineral rights but not the surface of the land.

2. Ownership of Mineral Rights Can Lead to Profits

Ownership of mineral rights can be incredibly profitable. Since mineral resources are in high demand and often yield a high price, owning these rights gives you the potential to earn income from their extraction.

3. Surface Rights Have Value Too

Surface rights have value as well. For example, if you own surface rights to a piece of land, you have the legal right to build on it or use it for recreational activities. In some cases, these rights can be sold or leased to developers or other parties who may be interested in using the land for their own purposes.

Understanding the difference between mineral rights and surface rights can help you make more informed decisions when it comes to land ownership.

The Life Cycle of a Barrel of Oil

So many essential tools and items we use in our lives are made possible by oil and natural gas, whose story all starts in the ground beneath our feet.

To understand the life cycle of a barrel of oil, we first need to understand how it is found. 

The development process of oil is long and complex; oil and natural gas don’t “act” the way most people think. They’re not the same product from ground to gas pump or ground to crayon, as different oils have vastly different life cycles. To know what oil is used for and navigate the “end products” of plastics, fabrics, fuels, and the infrastructure surrounding them, we need to learn how oil is found, produced, and refined for use.

How is the oil first found?

The search for an oil deposit usually begins with identifying a geologic formation/reservoir that may hold oil and/or natural gas. In the old days, this could have been based on gut feelings, seeing a hill and thinking the subsurface may have a similar structure trapping oil, or other not-so-scientific methods. In the modern day, geologists have access to a lot of scientific information, including core samples, logs from previously drilled wells, and seismic data. They also can tap into research compiled by entities such as the USGS (U.S. Geological Survey) or state agencies that regulate oil and gas exploration/development.

Once a geologist has identified what they believe to be a potential reservoir, petroleum engineers are brought in to help analyze the likely scale and viability of those reservoirs. If it still looks like a winner, the next step is for the oil and gas exploration company (“E&P” company) to secure the rights to drill. This typically means sending a land manager (“landman”) to verify the ownership of the subsurface property and to negotiate a lease with the landowner(s) to create a drillable unit, or bidding on the rights for a federal lease for federally owned lands.

At this point in its life cycle, the oil belongs either to the federal government or individuals who own the subsurface rights (“mineral rights”). The lease will specify what percentage of the production proceeds go to the landowner. Its “value” at this stage is not yet fully known. Geologists and petroleum engineers can give estimates, but because of the massive amount of variables and unknowns — including the volatile nature of oil prices further down the line — the value will change countless times before oil is actually extracted and refined.

How is the oil produced?

The E&P company will prepare to drill once the leases are secured and the title is verified. This can be a long process, including selecting the drill site, permitting, preparing the drilling/pad site, and building the infrastructure (roads to and from the well site, pipelines, electricity, etc.) to safely and efficiently bring the product to market.

Once a well is drilled, more scientific tests, including core samples evaluation and well logs, are run to help determine if it will be viable to produce and estimate reserves. If it is approved for the next step, then the well is completed and (hopefully) produced. 

After the product is produced by the “upstream” E&P company and reaches the surface, crude oil’s current market value can be more reliably estimated and is sold to a “midstream” company. Royalty owners also receive a royalty check at this point of sale for their portion of the proceeds as specified in the lease. It is important to note that the E&P company bears the expenses of the entire process to this point — the royalty owners do not share in the costs. 

The midstream company then handles the transportation, storage, and marketing of the product to the “downstream” refineries or processors. 

What can be produced from this oil?

Once the oil comes downstream to a refinery or processing facility, it will be turned into usable products. 

Oil is refined into a myriad of products that are foundational for our everyday life, from gasoline to plastic. Crude oil varies drastically depending on where it came from and how it was formed. Some have high paraffin/wax content, which can be used for cosmetics or polishes. It can come in many different colors (green, yellow, black, etc.). It can be thick and viscous or light and runny. Each has its own best uses and can be refined to yield different end products. 

Now nearing the end of its life cycle, the barrel of oil has a more specific purpose and is on to an equally specific location based on its product type — to the consumer.

What do people use in their everyday lives that come from oil? 

There are too many individual products to name! Wherever you are right now, innumerable things around you will be made, at least in part, out of oil. But we can take a look at the main kinds of products that come from oil production.

Out of the 7.2 billion barrels of petroleum consumed in 2021, 44% was used as motor fuel and 20% as distillate fuel. The rest was turned into other petroleum products.

Fabrics and surfaces are one major example. Clothing fibers like nylon and polyester. Road surfaces like tar and asphalt. Tent fabric. Diaper material. Solar panels. Coverings and coatings and shells and packages. Shoes and tights. Not to mention the dyes used to color and pattern those fabrics. 

Even charging stations for electric cars are fueled by power that requires oil and natural gas. We also have oil to thank for cosmetics and other everyday products like deodorant, lipstick, and toothpaste. 

One of the most important daily uses of oil is medical use. From the artificial limb that helps someone to live a full life after an accident to contact lenses, dentures, pacemakers, and MRI machines, oil is refined and manufactured into these life-changing products.

Oil and natural gas are an integral part of our daily living, beyond the gasoline in our vehicles or the natural gas that heats homes and other buildings. So many essential tools and items making up the details of our lives are made possible by oil and natural gas. And its story all starts with an eye on the outcrops and the ground beneath our feet.

Upstream. Midstream. Downstream. What’s the Difference?

Oil and gas companies are divided into three categories: upstream, midstream, and downstream.

Each type of company plays an important role in the industry, and they share some similarities while having their own unique differences. At a high level, upstream companies are responsible for the exploration and production of oil and gas, while midstream companies are responsible for the transportation, storage, and distribution of the resources. Downstream companies are the ones that purchase and refine the resources and distribute them to consumers.

Upstream

Oil and gas companies are essential for the extraction and production of the energy we use daily. Upstream oil and gas companies are those that are involved in the exploration and production (E&P) of crude oil and natural gas. They focus on finding potential oil and gas reserves and then extracting the resources from underground reservoirs. They are responsible for the drilling that yields these resources and for regulatory compliance. These steps require extensive knowledge and expertise in geology, engineering, technology and compliance/regulations.

Midstream

The midstream oil and gas sector encompasses the transportation and storage of crude oil and natural gas from their extraction points to their eventual consumption points. It is in this area where oil and gas companies play a critical role in the process, connecting producers with refiners, petrochemical plants, and other end-users. The midstream sector includes activities such as gathering, transporting, storing, processing, and marketing of crude oil, natural gas, and refined products.

The main responsibilities of midstream oil and gas companies include transporting and storing the resources to make them available for sale in the market. To do this, they use pipelines, tankers, barges, and railcars to transport the resources from their extraction points to their consumption points. Midstream companies also provide services such as blending different types of crude oils for better price competitiveness, pumping natural gas through compressor stations to increase pressure for onward transmission, fractionating natural gas liquids into different streams (e.g., ethane, propane, butane), and handling the overall storage and distribution of both oil and gas products.

In addition to transportation and storage, many midstream companies also provide additional services such as trading and marketing of oil and gas products. This allows them to take advantage of changing market conditions and maximize profits by buying or selling resources at optimal prices.

By carrying out their activities in an efficient and reliable manner, midstream oil and gas companies play an integral role in ensuring that the market remains well-supplied with resources. In doing so, they help maintain a steady supply of energy for consumers and businesses around the world.

Downstream

The downstream sector of the oil and gas industry is perhaps the most visible to the public. This is where gasoline and other petroleum products are refined and distributed. Companies in the downstream sector are responsible for taking raw crude oil and refining it into various useful products. Downstream companies also handle the transportation and delivery of products, as well as storage, marketing, and retail sales. These companies can range from small, independent operators to large, multinational corporations. By providing fuel, lubricants, plastics, chemicals, and other products derived from oil and gas, downstream companies play an important role in modern life.

Through these processes and activities, all three sectors help to maintain a steady flow of energy and other commodities that are essential to everyday life.

Ensure Your Beneficiaries Get Full Rights to Your Mineral Assets

Holding on to generational assets like mineral rights, rather than selling them off before you pass on, could hold several benefits for your beneficiaries.

When it comes to generational assets, mineral rights hold a lot of potential for your beneficiaries. Instead of selling, consider the gift that transferring your mineral assets could be for your loved ones, both now and in the future.

According to many experts, if you are willing and able to keep your mineral rights for more than 10 years, opportunities for leasing and gaining royalties greatly increase. Therefore, not only are you passing mineral rights to beneficiaries or an entrusted party, you’re also passing the financial benefits that come with rights ownership.

What Are the Benefits of Holding on to Your Mineral Rights?

First, if you lease your mineral rights to an oil and gas operator, you will typically receive a lease bonus. An operator leases the oil or natural gas rights from you and reserves the option to drill on your property over a set period of time called the primary term. Oil and gas leasing are essentially a “reasonable access to leased property” sale that comes with primary and secondary terms. A primary, or definite, term covers the oil and gas exploration and production, while the secondary term covers the life of production in paying quantities. In other words, if the well is not producing, the leasing expires after the primary term. However, if the primary term is up and the well is producing, you or your inheritors hold the lease until production ceases.

If the land is drilled and oil or natural gas assets are found, you can earn royalties on your mineral rights. These royalties can essentially be a means of income for whoever holds those rights. Imagine a monthly royalty check in the mail for as long as the production value lasts.

It’s also worth noting that in most states, keeping nonproducing minerals still means owing property tax or ad valorem tax, but there’s value in asset ownership. The world is not making any more land, and the U.S. is the only country with private mineral ownership, so opportunities to own mineral acres are few and far between. Keeping mineral assets can be a wise move for future wealth, especially if you are living in a period of inflation and experiencing a volatile stock market.

Moreover, the question of how much mineral rights are worth per acre will change constantly. As innovation happens and technology improves, operators will be able to tap into more resources and obtain minerals in new ways that could be financially beneficial to whoever holds the rights to them.

Are There Any Challenges to Inheriting Rights to Minerals?

The benefits of passing mineral rights on as generational assets are many, but that doesn’t mean the process doesn’t have its complexities.

For example, dividing mineral rights among different beneficiaries can be tricky. If you inherit mineral rights along with another party and you own a specific percentage of that asset, you may encounter resistance to fragmenting the rights further by handing them down to your beneficiaries. (However, undivided mineral rights ownership is one of the best and easiest qualities for generational assets ownership.)

Surface owners can also run into trouble by assuming they own the mineral rights connected to the ownership of the surface property. If left uninformed, beneficiaries may have to work out what they’re actually entitled to. Meanwhile, oil and gas companies looking to arrange leases can take advantage of naive title holders and offer rates that don’t match up with the potential value of the asset. In the most extreme examples of uninformed mineral rights holders, predatory mineral buyers can capitalize on unknown mineral rights.

This is why getting a land deed drafted and making sure it’s executed, notarized and filed appropriately is critical.

How to Set Up Mineral Rights Beneficiaries for Success

You want to make inheriting mineral rights as easy as possible for your family or chosen beneficiaries, so how can you mitigate the above challenges effectively? Consider the following steps:

1. Bring in an expert to help manage the process.

It’s unlikely that you or your beneficiaries are experts in mineral rights. One challenge of inheriting rights to minerals is ensuring that you’re capturing their full value, which can oftentimes become a full-time job. Seek out an experienced mineral manager to make sense of your assets, to make sure you hand them down with accurate documentation, and to make the most from them in the form of lease bonuses and royalties. They can be a knowledgeable, invaluable partner who understands specialist information, like the cost basis for inherited mineral rights and the day-to-day operational concerns connected with oil or natural gas assets.

2. Make sure the mineral deed is valid.

To ensure your deed is valid for estate transfer, it must be in writing, the grantee and grantor must be identified by signature, and both parties must have the legal capacity to transfer or accept the assets. They must also be able to locate assets on the ground. It’s frustrating to have a will that tells the reader to “see inventory” when referencing assets but doesn’t include a consolidated, detailed inventory of the mineral assets.

Holding on to generational assets like mineral rights, rather than selling them off before you pass on, could hold several benefits for your beneficiaries. While drafting deeds and obtaining leases may seem complex, with a trusted operator, your assets can become a regular income for your loved ones for years to come.

Matt Autry is the President, Oil, and Gas at Valor, a specialty asset services provider focusing on mineral management, oil and gas operator services, accounting, and back-office outsourcing.

Ensuring Your Property Tax Statement Accuracy

While property tax statements may feel mundane and tedious, it is imperative that you do not overlook or ignore them.

While most property tax statements are correct and require no revisions, many can include discrepancies that can cost you money. At Valor, our team is committed to reviewing your property tax statements to ensure they are accurate. We do not want to see asset owners being taxed on land they don’t own or paying for a mistake made by a third party.

Basic information and key dates regarding property tax statements:

1. When are property tax statements mailed out?

Usually the first week of October.

Note:  Failure to receive a property tax statement does not waive penalties and interest. Therefore, it is important that you have records of all your property tax statements. 

2. What do I do if I don’t receive my property tax statement?

Visit your local county tax website (where your property resides) to search and access your statement. If you have Valor Mail Services set up, we will complete this process for you. 

3. What is the last day to pay my property taxes without penalties?

January 31st.

Need assistance with property taxes? Let us help! Contact us today and let Valor be your extra set of eyes.

Why You Need to Know Your State’s Dormant Mineral Rules

When it comes to mineral estate planning, many mineral rights owners don’t realize how easy it is to lose these rights. Assets do not always remain static once the initial transfer has occurred. In fact, unless their mineral rights are in states such as Texas, Oklahoma, or New Mexico, inheritors will likely need to take action to keep their legal rights to mineral assets valid.

How Can You Lose Your Mineral Rights?

The tricky part is the laws around mineral rights vary from state to state. Your rights will be different depending on where your mineral rights are located, as will the timeline by which your rights might revert to the surface owner. Many rights are lost when owners lose track of their filing dates or fail to update or refile an affidavit to maintain them.

Take North Dakota, for example. In order to remain the owner of severed mineral rights in this state, you need to file an affidavit every 10 years. Otherwise, your rights revert back to the surface owner. In the 1999 case of Spring Creek Ranch vs. Svenberg, Spring Creek sought the addresses of mineral rights owners. All they found was a deed from 1950 without a street address, but this was sufficient for “reasonable inquiry,” and the mineral rights reverted to them. As long as effort is made to discover the owners of rights and the rights remain dormant, then ownership can be transferred.

Another way you can lose your mineral rights is by failing to pay state ad valorem property taxes on them. Just like any other legal asset, mineral rights must be properly paid to the county tax office. If you don’t pay taxes on your mineral rights, you risk losing them.

Some mineral rights have been lost through poor management. Oversight of a filing or expiration date can cause havoc for inheritors and their assets. Not being proactive is also a risk — owning property in a popular area that doesn’t get leased due to poor management can be just as unfortunate for inheritors.

Still, some people just don’t care about their assets as much as others. This can be especially true of mineral rights. If an owner feels like their assets will never be tapped into or yield a product, then they might want to avoid paying taxes and the hassle of filing the stipulation process, and will voluntarily let their rights lapse.

What Happens If You Lose Your Mineral Rights?

It’s important to have some degree of urgency over keeping the rights to your mineral assets, but you don’t need to let fear or anxiety take hold. By arming yourself with knowledge, educating yourself, and preparing for the realities of mineral ownership, you can avoid many problems.

First, it’s crucial to know the different ways to lose or forego mineral rights. Check what the rules are in your state. Some states (like Louisiana) have “prescription assets” and others (like North Dakota) operate under a dormant mineral statute, which states that rights may be lost if owners are not utilizing their minerals.

Unfortunately, the process of getting rights back can be difficult, if not impossible. Once lost, mineral rights revert back to the surface owner, and you will not get them back unless you purchase them again or they are conveyed to you. That’s why ensuring your filing is up to date and that you know exactly what to do to maintain mineral rights in your state is so vital.

What Is the Best Way to Go About Protecting Your Mineral Rights?

Mineral rights don’t just stick around. Like any asset, they need maintenance. Luckily, if you have the right help and support, maintaining your rights isn’t too much of a chore.

1. Keep rights current by filing.

In most states, you will renew your mineral rights by filing an affidavit (similar to filing a deed). It should be drafted, executed (by signing and notarizing), and then filed in the applicable county. Valor can help you do this — we go find filing requirements, format pages according to the state’s individual rules, and so on so that you don’t have to.

2. Keep rights through a claim of dormancy.

If the surface in question is dormant, and you haven’t leased it to oil and gas companies, you can still maintain your rights to mineral assets if you file a statement of claim or dormant mineral deed to state that the surface is knowingly dormant. Timing for these filings will, again, vary from state to state.

3. Use technology to keep track of assets.

We use our proprietary platform mineral.tech® and its evolving built-in features to protect mineral rights from expiring. After you log rights onto the platform, it’ll alert both our team and you as the rights owner when they’re nearing their asset expiration date. This allows us to effectively manage, plan, file, and execute accordingly.

4. Partner with a company that’s got your back.

Valor is an expert in this industry, and we can keep you up to date with any state-specific changes or actions you need to complete to keep your mineral rights. Part of our job is to prevent mineral rights from expiring and transferring back to the original landowners. So, with us on your team, you can relax knowing that we have safeguards in place to mitigate this.

At Valor, we know the value and importance of assets. We never want to see a prospective or existing client lose their mineral rights. We have a deep interest in setting up inheritors to avoid challenges. Not every mineral management company will add this value; many will not agree to manage non-producing assets. But we see this as part of caring for clients’ overall interests.

How to Effectively Pass Mineral Rights on to Your Beneficiaries

Leaving mineral rights to your beneficiaries can be incredibly complicated. The right mineral management partner can make all the difference.

Generational Rights to Minerals: How to Set Your Beneficiaries Up for Success

When thinking about estate transition, questions may come to mind about how to create a detailed descent and distribution plan for your mineral assets. You may be wondering how to ensure the mineral rights transfer is successful, what some of the pitfalls are to avoid, and how you can protect your assets.

At Valor, we understand the importance of thorough estate planning to ensure you have secured your mineral rights for your beneficiaries. Addressing these questions head-on — with knowledge and clarity — can help set you on the path to a successful mineral estate transfer.

How do mineral rights get passed from one generation to the next?

Mineral rights are the ownership of the subsurface real property. When hydrocarbons are produced, the mineral owners are entitled to a royalty percentage of the production proceeds. When you pass away, your beneficiaries inherit your mineral interests. If you have a will, it is up to the executor to probate your will and make sure the assets are passed on in accordance with your will. Since mineral rights are considered real estate, this will require a conveyance to be filed in your respective county courthouse. The executor will need to prepare, execute and record the conveyances. If you pass on without a will (intestate), the mineral ownership will pass in accordance to the inheritance laws of the state in which the property is located — this usually requires an Affidavit of Heirship to be filed in lieu of a deed.

In either case, it is important to know what exactly is owned so that the property descriptions on the conveyance are accurate. 

First, in order to verify ownership, a landman, title company or attorney are usually hired to research the ownership records of the property(ies) in question. It is the norm for the deed to have the gross property description, not necessarily each individual owner’s net ownership. So even if you have copies of deeds, it will likely require further research to verify net ownership. It is also common for the surface owner(s) and the mineral owner(s) to differ. Just because you own a house does not necessarily mean you own the minerals as well. It’s also common for there to be multiple owners of a property, especially after a generation or two. Sometimes an owner sells to someone outside of the family, or gets divorced, and you can have a range of related and unrelated owners of the same mineral property.

Once the conveyances are filed of record, the next steps are to make sure the county tax authorities update the records to match. They should also make sure any oil and gas companies that have an active lease on the properties are notified. In an intestate case, oil and gas companies may require additional documentation to prove ownership.

This can be quite a tedious and expensive process if there is not a plan in place along with the correct people designated to handle it. Too often individuals did not know about the mineral rights until they’ve been inherited and they have to start from scratch. Do your beneficiaries a favor and keep good records, have the right people to help, and have your estate plan in order.

What are the biggest challenges in mineral estate planning?

  1. 1. Family Matters: Inheriting and keeping track of mineral rights is becoming increasingly complicated. For example, let’s say your grandfather divided mineral rights ownership among your family members, with each owning a specific percentage. While you may want to exclusively split your portion with your own children, others may hold a different view. Some may opt to sell their rights to outsiders, further fragmenting mineral rights.
  • 2. Documenting what you own: Owning a real estate’s surface rights doesn’t automatically mean owning the mineral rights. This can be most challenging for your beneficiaries if they don’t know where to start. An important piece of the puzzle to prevent confusion for them would be outlining the plans for the mineral rights in your will in as much detail as can be provided. The more you’re able to explain and translate for their understanding, the more responsibly they can make decisions on ownership and the future of the rights and property.
  • 3. Educating inheritors: When the mineral rights are transferred to your inheritors, some oil and gas companies will reach out and ask them to sign leases. Unfortunately, some of these enterprises can capitalize on your beneficiaries’ naivety or lack of regular valuation knowledge and offer exploitative rates.
  • 4. Being taken advantage of: There is also the threat of predatory mineral buyers taking advantage of your mineral rights inheritors if they are unaware of their inheritance. Mineral buyers usually work with probate firms to research and target potential heirs of wealth who did not file a last will. Hunters sometimes demand that the beneficiaries agree to share a significant portion of the inheritance with them before disclosing the source of the inheritance.

How can you set up inheritors to avoid challenges?

Though the aforementioned are all major hurdles, you have a couple proven ways to mitigate these issues and set your inheritors up for lasting success:

1. Provide Clear Documentation for All Parties

Inheriting rights to minerals, oil or natural gas could produce a financial windfall for your beneficiaries. But maintaining this complex asset class can be a daunting task, especially for those unaccustomed to maximizing the value of mineral rights. Set up your inheritors now with clear, well-thought-out direction for them when the time comes to take on the mineral rights. Having your rights audited before inheriting them will prevent confusion and complicated decisions (and fees involved with auditing after inheriting) for beneficiaries and any legal and insurance teams involved down the road.

2. Utilize a Mineral Management Company 

You simply may not have the time or expertise to effectively manage mineral, oil and gas assets — nevermind being certain that you’re following best practices. A number of beneficiaries don’t even know the details of everything they inherit. If they do, they aren’t equipped with an accurate picture, or they’re not getting the true pay for it. For that reason, mineral asset owners often choose to work with a professional mineral management company who can oversee key tasks on their behalf, including conducting regular valuations to fill in the gap in the value of the rights versus the market price at any given moment. These regular appraisals will keep your inheritors up to date on any changes in value of the mineral rights as well as be crucial in making any decisions about them or the land the minerals are on. Utilizing a mineral manager provides your inheritors with a knowledgeable source of trustworthy guidance and information on a regular basis.

When mineral assets are part of an estate or trust, you need an experienced partner who understands more than just the market value. And that’s what we do. Valor understands the day-to-day operational challenges, the long-term investment environment, and the ins and outs of complex agreements and transactions. We safekeep your records with our proprietary mineral tech software (mineral.tech®, equipped with up-to-date security and revenue-optimization technology) to ensure that your rights are protected — and effectively managed and reported — making for a seamless, profitable transition to your inheritors.

Allowing an expert to work as your partner on your estate or trust takes the work and worry off of your and your inheritor’s hands while still safeguarding your asset rights. For your peace of mind in managing and securing your mineral rights, get in touch with one of our experts today.

How to Manage Your Minerals From Afar

Some people don’t live in the same place as their mineral assets. Here are best practices and tips for managing your minerals from a different location.

There are approximately 8-12 million mineral owners across the United States. Many of them not only live a distance from their assets, but have never even seen or set foot on the land where their minerals reside. So how exactly can they engage in confident, competent mineral asset management? For many, the answer lies in understanding what it means to own minerals from afar, as well as working with mineral management companies that can simplify the experience.

First, though, let’s examine some of the reasons people may not reside anywhere near their minerals. The most obvious way this can happen is through relocation. People move all the time for different reasons. They may therefore sever, or split, their surface property rights with the next buyer, but retain rights to whatever minerals exist within the land they sell.

Inheritance is another way that people become mineral owners. For example, you might live in California and inherit minerals in Texas. This happens frequently and can prompt a lot of stress on the part of the beneficiary who doesn’t know what to do next.

Finally, it’s important to note that some mineral buyers and investors actively seek out minerals regardless of location. They know that minerals are a worthy investment and care more about the geology and where drilling is hot at the moment.

Challenges When You’re Not Living Near Your Mineral Assets

It’s worth mentioning that even if you live in the same area as your minerals or are a surface owner of a property teeming with minerals, you can still have challenges. However, managing your minerals can get a bit stickier if you’re not close by. Perhaps one of the biggest concerns is staying up-to-date and compliant with local, state, and federal mineral rights laws and regulations.

Mineral rights laws and regulations can differ wildly from state to state. You could own the same type and amount of mineral in two states but wind up having vastly different considerations. For example, one jurisdiction may limit how many extraction operations are allowed in a particular region during a given timeframe. Another jurisdiction may have conservation-related statutes like Colorado, which establishes mine and well land-use rules.

All these legal guardrails can become confounding. However, they’re essential to know and follow. No mineral owner wants to run afoul of non-ownership or ownership-in-place theory interests. Still, it can be hard to know exactly what moves are allowable (and when they’re permissible, in some circumstances).

Another hindrance to being physically removed from your minerals is that you may misunderstand which land or assets you own. It’s hard to have a good feel for your minerals in the Permian Basin when you live in Chicago. This can be doubly confusing if you’re an inheritor since many places have complicated inheritor laws. Add this possibility to all the tax differences and you have a lot of room for error and frustration.

Valor’s Solution to Remote Minerals Management

The question remains: How can you effectively manage mineral assets and live elsewhere? At Valor, we’ve included several features and benefits into our service offerings that give remote mineral owners peace of mind.

1. Our team helps with everything, including leasing mineral rights.

The Valor team is composed of experts ready to handle all aspects of remote mineral ownership. These include in-house landmen, accounting professionals, land professionals, a Juris Doctor, and certified mineral managers. You can also tap into our collective knowledge to assist with common decisions, like leasing mineral rights.

When you lease to oil and gas companies, you want to get the best contract possible. We bring the expertise to advise you on obtaining strong terms; Valor maintains properties for years and currently manages minerals in 32 states. The better your lease, the more money you may make. And if you make money, we have developed automated processing for your 1099s to ensure their accuracy, too.

2. We offer a proprietary software tool. 

One of the biggest advantages Valor brings to the table is mineral.tech®, our proprietary mineral asset management software. This data-rich platform integrates accounting, land management, data analytics, and reporting for all of our clients. 

Mineral.tech® provides digital document management and includes a GIS mapping platform, full integration with public oil and gas data, and customized reporting that analyzes revenue and well data for your accounting and decision-making needs. You can see all of your assets mapped out and any activity on bordering land, including nearby production, drilling, and permitting activity. You no longer miss things that are happening on your non-producing assets. 

With mineral.tech, you have 24/7 portfolio visibility from all angles, with access from anywhere in the world to everything you need to manage your minerals no matter where they’re located. 

3. We handle the regulations associated with mineral management and ownership.

One of the most common issues that mineral owners run into is dormant mineral filings. We’ve worked hard to recover more than half a million dollars in suspended funds for clients with our most requested option — helping owners navigate dormant laws and regulations.

The laws surrounding mineral rights, mineral leasing, and everything in between are different from state to state. While it’s possible to go to court if necessary, most mineral owners want to do everything they can to not pay avoidable legal fees. Our up-to-date understanding of mineral ownership rights and responsibilities provides reliable protection for the more than 8.4 million gross acres and 450,000 net royalty acres we manage on behalf of our clients.

Whether you’re living close to your mineral investments or you’ve never even seen the property, you can trust Valor. We manage more than $150 million in annual oil and gas revenue for our clients and are efficient and easy to work with. Get in touch with us to get started on managing your mineral assets more effectively today.

How much are mineral rights worth in Texas today?

It’s important to understand the history and current value of your mineral rights and ensure you are maximizing your opportunities as the rightful owner. Valor’s expert mineral managers are here to help. 

Understanding Texas mineral rights value fluctuation?

Texas is the king of oil and gas in the United States. It produces more oil and gas historically than any other state, and it has done so for a very long time. For generations, mineral rights have been divided among heirs of oil-holding families in Texas. These owners now want to know what their rights are worth.

Location matters

There are differences in the value of Texas mineral rights depending on where they are located. Owning in the heart of the Midland Basin might be more valuable than owning mineral rights in Llano, Texas. It’s important to learn more about where your rights are located and how close they are to oil and gas development.

Not every operator is equal

Oil and gas operators vary, each one is different. Some operate better than others and provide more value to the owners of the minerals. Knowing who operates your property and how they work is beneficial in knowing the value of your minerals


Find a Trusted Professional

Finding a professional mineral management company is the best route to learning more about what you own and what it might be worth. A Certified Mineral Manager at Valor can help you better discover the value of what you own and provide revenue optimization for your mineral rights.

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What is a Division Order & When Should I Receive One?

Division Orders are arguably one of the most pertinent legal records for mineral royalty owners. In most cases, a single well will have multiple owners. Therefore, it is imperative to have an accurate and updated division of interest for producing wells.  

What is a Division Order?

A Division Order will include the owner’s decimal interest (net revenue interest (NRI)), type of interest  (ex: royalty, mineral or working interest), the producing property’s name (legal description and/or well name and number) and the owner’s name.  

Who Prepares & Distributes Division Orders?

The Division Order is sent from the operating company to the owners of an interest in the producing well. They are created once the title has been confirmed, a well has been drilled and production has begun. However, a Division Order is generally received by a mineral royalty owner through the mail,  often months after well completion. Therefore, you should not be expecting a Division Order on a well that is not yet complete.  

What Do I Do When I Receive My Division Order?

Once a mineral owner receives a Division Order, they must review it, sign it, and send it back to the operating company. It is vital that the mineral royalty owner review it closely and ensure all information is accurate. Do not sign and return the Division Order unless you are confident it is accurate, and you are satisfied with all information outlined. If information is not accurate, you must contact the company that issued the Division Order. We recommend making a copy of all Division Orders you receive for your records and have a good digital document management system. It is also important to know that in most cases owners will not receive royalty payment until they have signed and returned a Division Order.  

What if I Haven’t Received My Division Order?

If you know you should have received a Division Order but have not, there are a few things you can do to help expedite and rectify the issue.  

• Contact your Operator (this information can often be found online) 

• Contact the Purchaser of the oil and natural gas  

• Contact a Mineral Management company or other professional 

When you contact the Operator, ask to speak to a division order analyst. Division Order Analysts are responsible for maintaining the company’s pay decks and ensuring that the ownership information is correctly maintained in the operator’s system. Most operators have an email on their website for owner relations, start by sending an email to this email address and including your name, address, and owner number. Provide them any recorded documentation that you have from the appropriate county clerk where the properties are located. If you recently inherited the mineral rights, then provide them with the former owner’s name, address, and social security number along with any estate documents (probated will, letters testamentary, affidavit of heirship). Making sure that you provide the correct and full data to the operators will make the process easier and more efficient for them to transfer the royalty interests. If for some reason you are unable to reach the division order analyst after trying to contact them via phone and email, consider composing a letter and including all the information above and mailing it to them certified with the USPS.  

If you find yourself not able to keep up with your Division Orders or want to add another set of eyes to review all information, Valor is here to help.