Mineral Rights in Oil and Gas: What You Need to Know

Mineral Rights in Oil and Gas: What You Need to Know

The traditional conception of real property ownership was that a landowner owned his plot of land along with a column of dirt down to the center of the earth and a column of air up to the sky. This conception no longer holds true. It is now common, especially in Southern Illinois, that when one purchases a piece of real property, the purchaser obtains title to the surface of the land, but not the column of dirt beneath it. Very often, the mineral rights to a piece of property have been severed, and the owner of the mineral rights has the authority to mine them.

When mineral rights are severed in the conveyance of a piece of property, the severance creates two distinct and separate interests in the land—a surface estate and a mineral estate, either of which can be conveyed, devised, or leased. When this occurs, the owner of the surface estate is subservient to the owner of the mineral estate. This means that he may not interfere with the activities reasonably necessary to extract the minerals from underneath his land.

While title to metallic minerals vests2 at the time of conveyance, title to oil and gas does not, due to the tendency of these types of minerals to move around under the earth. Rather, mineral rights in oil and gas do not vest until they are actually discovered. Thus, mineral rights to oil and gas are better conceived of as rights to exploration and, very often, they are mined pursuant to a mineral lease rather than outright ownership. These leases are subject to the same rules as ordinary leases, wherein the minerals found on the land belong to the lessor, but the lessee has the right to explore and reduce them to possession, for which he pays rent or a royalty to the lessor.

Like all leases, Illinois courts impose an implied covenant of reasonable development2 upon oil and gas leases, meaning that the lessee has a duty to the lessor to reasonably develop the premises; in these cases, that means a duty to explore and mine. However, the rights to exploration are not unlimited; in Illinois, the owner of a mineral estate may not burden the surface estate with railway tracks, manufacturing equipment, structures, or the like. Similarly, the surface estate owner retains the right to subjacent support—that is, the mining or exploration activities going on under his property may not cause the surface estate to subside or collapse, even if the mining company took proper care or acted in accordance with industry custom. Thus, the rights to subjacent support is paramount.

Call a Marion, IL Real Estate Lawyer for Assistance

Most landowners do not want these kinds of activities going on under their land, especially if oil and gas mineral rights are involved, due to the amount of drilling and other disruption those types of minerals require for discovery and extraction. Minerals and oil rights can be very complicated and confusing. If you would like more information about mineral leases and your rights as a landowner, contact the Southern Illinois real estate attorneys at the Lawler Brown Law Firm at 618-993-2222.

1https://www.law.cornell.edu/wex/vest

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