MINERAL RIGHTS INTRODUCTION

Many of you have seen advertisements for the Chesapeake Energy 1/2-hour investigative news report on drilling activity and the impact on citizens and communities in Tarrant, Johnson, and Dallas Counties. The goal of this report is to provide accurate and fair fact based journalism.

I do not directly endorse Chesapeake, or any specific corporation. This information is provided for educational purposes and your convenience only. Click here to play the video.

Savvy homeowners are using their homeowner associations as leverage and even joining with others, they are wisely hiring lawyers. And with Fort Worth being the epicenter of the busiest unconventional gas field in the U.S. — the Barnett Shale, with some of the richest reserves in Tarrant County, mineral leases are becoming negotiating points in home sales. Sellers can transfer minerals to buyers or keep them when they move.

For consumers who are unfamiliar with what mineral rights are, I am providing a brief explanation here. I hope that it helps people with any basic questions they may have. I know that mineral rights can get pretty complex and tricky. Whenever a legal question comes up, I refer my clients to an attorney. It's a complex matter and not one that I take lightly. I answer only the basic questions and since I am not a minerals expert, refer all my clients to someone who is!

Mineral Interest:  The ownership rights related to the real property. The owner would own all or part of the mineral estate. He or she would hold the right to search for, develop and produce minerals from the property. The surface rights can be separated from the mineral interest by either selling or leasing. There can be more than one owner of mineral interests and each owner may have different rights. The holder of the mineral rights would have the right to use the surface to the extent that is necessary to extract the minerals.

Minerals:   Minerals can be gas, oil, coal, uranium, etc.

What is an oil and gas or mineral lease?   When the owner of the mineral interests allows an operator to search for, develop and produce the minerals in exchange for compensation. It can include all minerals or exclude certain minerals. Typically, what can be produced is specifically spelled out in the lease.

Royalty:   A form of compensation to the lessor under the lease. Normally expressed in the form of fractions...1/8 interest, 1/2 interest, etc. They can be sold separately from the mineral interests.

Executive Right:   The power to lease the minerals. A seller may decide to sell a portion of the mineral interests but retain all rights as to whether the mineral interests can be leased.

Reservation:   The seller retains a portion or all of the mineral interest in the property.

I know that mineral rights can get pretty complex and tricky. Whenever a question comes up, I refer my clients to an attorney. It's a complex matter and not one that I take lightly. I answer only the basic questions and since I am not a minerals expert, refer all my clients to someone who is!

Cassie's helpful suggestions:

• Band together with your neighbors or neighborhood association to gain strength in numbers.
• Learn what other neighborhoods have done – not only in terms of signing bonuses and royalties, but also provisions such as safety, noise, truck traffic and liability issues. Look at contracts that cities have signed.
• Educate yourself on the drilling company and its plan for your neighborhood, including the drill site and plans to transport the gas to market.
• Make sure you understand all the terms of a contract before signing. Consider consulting an attorney.
• Learn what ordinances your city has in place and how that might affect your lease offer.
• Make sure any offers you receive are in writing.

For more information, please visit www.bseec.org.  The Barnett Shale Energy Education Council (BSEEC) is a community resource that provides information to the public about gas drilling and production in the Barnett Shale region in North Texas. On this site, you will find a full impact study report

NEIGHBORHOOD ASSOCIATION PRESENTATIONS (AVAILABLE HERE)

You will find useful PowerPoint presentations to share with your neighborhood association.

Gas Well Lease Rates Comparison Chart - This is a chart of lease rates (bonuses and royalties) that NAs have been able to negotiate. You may use this as a comparison for your NA.

Gas Drilling 101 - The facts on drilling in your neighborhood. - This is the PowerPoint deck presented at the October 23rd educational event. Please feel free to download and use in your neighborhoods.

Lease 101- What to know before signing a lease - This is a PowerPoint deck presented at two of our meetings. It was created by a local land attorney.

Contact Help

Bob West - available for legal advice for leases
Whitaker, Chalk, Swindle & Sawyer, LLP
301 Commerce Street, Suite 3500
Fort Worth, TX 76102
rwest@whitakerchalk.com

James Huling - available for speaking and as a consultant for your Neighborhood Association
Kiamichi Energy Corporation
2308 Mistletoe Boulevard
Fort Worth, Texas 76110-1132
jrhuling@kiamichienergy.com

Gary Hogan - available for speaking for your Neighborhood Association
President Chapel Creek NA www.chapelcreekfw.org and member of original gas well drilling task force
hogangaryfwtx@aol.com

Warmest Regards,
Cassie Davis, Realtor
www.ColleyvilleTexasHomesForSale.com
Cassie@ColleyvilleTexasHomesForSale.com
Prudential Texas Properties, 4717 Colleyville Blvd,Colleyville, TX 76034
(972)333-9070 Cell, (817)268-5000 Office, (817)887-0820 e-Fax
Licensed in the State of Texas

Client Comment: "Cassie is THE BEST REALTOR we have ever had in selling and purchasing five properties nationwide! We observed her professional listing and marketing skills and she helped us find and negotiate a great buy on our new home. She is a real jewel in her company and our agent for life!" The Russells, Keller, Texas