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Additional Considerations for Owners with Surface and Mineral Rights

Much of the discussion on this web site distinguishes between mineral and surface rights as if they are severed, that is, owned by two different individuals.  However, many surface owners also own the mineral rights which opens an opportunity for the owner to negotiate some issues, such as use of the surface, as part of the mineral lease negotiations.  This page briefly overviews issues an individual may want to consider when they own both the surface and the mineral rights, especially as they enter into a mineral lease.

Mineral owners who also own the surface rights must be careful to not agree to provisions in a mineral lease that prevents them from appropriately protecting their surface interests at a later time.

Surface Damages

The primary incentive for an owner of severed mineral rights to define in a mineral lease what the oil company can do on the surface may be to limit the potential liability of the mineral owner for damages to the surface caused by the lessee of the mineral rights. 

When the surface owner also owns the mineral rights, a mineral lease certainly is an opportunity for the landowner to explicitly negotiate what the mineral lessee can do on the surface, rather than rely on law to implicitly define that limitation

Negotiating a mineral lease also is an opportunity to negotiate use of the surface if the individual owns both the mineral and surface rights. It is a time to set limits on where exploration and production can occur, such as away from buildings or water sources. It also is an opportunity to discuss the need for fences and cattle guards to keep livestock away from the company's activities.

However, if these details are not addressed in the mineral lease, there will be another time to address these matters as explroing and drilling are about to commence, as set forth by state law (N.D.C.C. chap. 38-11.1). Mineral owners, however, will want to be careful to not include any language in the mineral lease that may limit the opportunity to discuss surface damages at a later time.

Final thought:  seek knowledgeable legal counsel before entering into an agreement that impacts the exploration and production of mineral interests.

Last Updated July 30, 2010

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