In a video from MineralRightsCoach.com, the four most common types of ownership are explained. Mineral rights expert and narrator Bret begins, "Ownership type determines who pays to operate or drill the well, who participates in the lease operating expenses, and what tax advantages you can benefit from."
Here are the primary types of ownership, taken from the video:
- Mineral interest: the property interest created in oil and gas production after a sale or lease. The owner of a mineral interest normally has the right of entry and exit to the property, and the right to use as much of the surface as is reasonably necessary for the purpose of conducting exploratory operations.
- Royalty interest: the interest created by leasing mineral rights. The royalty interest is retained by the owner of the mineral rights when that owner enters into a lease agreement with another party. (This is a non-working interest.)
- Working interest: this is created through a lease and is responsible for all of the exploration, drilling, development, and operation of a property. The working interest's share of revenue is the amount that remains after deducting the share of the royalty interest and other non-working interests.
- Overriding royalty interest: this constitutes a portion of the revenue from oil and gas production. This do not constitute an ownership of minerals under the ground, and it expires when the lease has been abandoned due to the end of production
For more information, see the article. If you prefer to read, there is a full written transcript.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
