RIGHTS OF THE MINERAL STATE

Question 1

WHAT ARE THE RIGHTS OF MINERAL STATE?

Answer 1

1. RIGHT TO SELL AND CONVEY ALL OR ANY PART OF MINERALS
2. RIGHT TO EXPLORE AND DEVELOP MINERALS
3. RIGHT TO EXCECUTE A LEASE FOR EXPLORATION AND DEVELOPMENT “EXCECUTIVE RIGHT”
4. RIGHT TO BONUSES
5. RIGHT TO DELAY RENTALS
6. RIGHT TO ROYALTY
7. THE RIGHTS CAN BE SEVERED Through
   - >A VALID INSTRUMENT OF CONVEYANCE

Question 2

WHAT IS THE RIGHT TO EXPLORE AND DEVELOP THE MINERALS?

Answer 2

OWNER OF THE MINERAL STATE HAS THE RIGHT TO THE REASONABLE AND NECESSARY USE OF THE SURFACE. - STATE OF SURFACE DAMAGE LOSS

Question 3

WHAT IS A BONUS?

Answer 3

MONETARY PAYMENT MADE TO THE MINERAL OWNER OR OWNERS FOR THE PURPOSE OF OBTAINING AND OIL AND GAS LEASE

Question 4

WHAT IS A DELAY RENTAL?

Answer 4

A PAYMENT BY THE LEASEE TO LESSOR FOR THE PURPOSE OF MAINTAINING THE OIL & GAS LEASE FOR A PERIOD OF TIME (USUALLY ONE YEAR) DURING THE PRIMARY TERM OF THE LEASE PAYMENT OF THE DAILY RENTAL EXCUSES THE LESSEE NEED TO CONDUCT DRILLING OPERATIONS UNDER THE LEASE

Question 5

WHAT IS ROYALTY?

Answer 5

A NON-COST BEARING SHARE OF THE OIL AND GAS PRODUCTION

Question 6

WHAT IS ASSOCIATED AND FOLLOW THE EXECUTIVE RIGHT?

Answer 6

RIGHT TO BONUS AND DELAY RENTALS

Question 7

WHAT IS RULE OF CAPTURE?

Answer 7

EACH MINERAL OWNER IS ENTITLED TO EXTRACT ALL THE OIL AND GAS FROM HIS LAND NO MATTER WHERE IT MIGRATED FROM SO AS LONG AS STAYS WITHIN VERTICAL BOUNDARIES

Question 8

WHAT ARE THE LIMITATIONS OF THE RULE OF CAPTURE?

Answer 8

1. PROTECTION OF CORRELATIVE RIGHTS - THE RIGHT TO CAPTURE OIL AND GAS FROM UNDERLYING LAND WITHOUT WASTE OR NEGLIGENCE
2. LAW OF CONSERVATION- TO AVOID THE ECONOMIC AND PHYSICAL WASTE OF OIL AND GAS RESOURCES- WELL SPACING, WELL DENSITY, WELL LOCATION, WELL PRODUCTION ALLOWABLES, WELL UNITIZATION FOR ENHANCED RECOVERY
3. STORAGE OF EXTRACTED HYDROCARBONS- HC BECOME PERSONAL PROPERTY, STATES ALLOW CONDEMNATION OF DEPLETED RESERVOIRS FOR STORAGE
4. SURFACE TRESPASS-DRILLING ON PROPERTY WITHOUT OWNERSHIP RIGHTS IN MINERALS STATE- LEGAL SURFACE WITH DOWNHOLE DEVIATION TRAVERSING VERTICAL BOUNDERIES, ILEGAL SURFACE LOCATION

Question 9

How close to lease line you can drill a well?

Answer 9

According to the Rule of Capture each mineral owner is entitled to extract all the oil and gas no matter where it migrates from, so long as he stays in his vertical boundaries. That means could drill the close the boundary, but a rig occupies space and cannot trespass neighboring properties so the well will be several feet away from the boundary to cope with the footprint of the rig. Also, we have to take into account the conservation laws (well spacing, density, location, production allowable, and unitization for EOR).