What is the Barnett Shale?
The Barnett Shale is a geological formation of sedimentary rocks located from the Dallas area through the west and south of Ft Worth. It's estimated to be about 5,000 square miles. Many experts believe the Barnett Shale could be the largest onshore natural gas field in the US. The Barnett Shale has approximately 2.5 trillion cubic feet of natural gas, and is estimated to contain up to 30 trillion cubic feet of natural gas resources. Oil has also been found in smaller but commercially viable quantities.
The shale is very hard which makes the natural gas and other minerals difficult to extract. Recent advances in hydraulic fracturing technology and horizontal drilling make it possible to extract the minerals cost effectively.
Much of the Barnett Shale is underneath residences and is continuing to be uncovered as the DFW metroplex grows. These land owners may have the option to sell their mineral rights to the various energy companies in the area.
Basic Facts About Mineral Rights
Historically, buyers and sellers of small or mid-size residential lots and homes in Tarrant County suburbs such as Southlake, Grapevine, Colleyville, Keller and much of DFW have not been concerned about the conveyance or retention of mineral interests. Mineral rights for these properties may have been severed in the past, either by a former property owner or a developer, or the value of the mineral interest may have been relatively insignificant. There has historically been little risk that the owner of the mineral interests under property in these areas could or would access the surface of the property to drill or excavate for minerals. In recent years, the exploration of the Barnett Shale and advances in drilling technologies have led to increased drilling activities and speculation in and near DFW and Tarrant County in particular. In turn, most buyers and sellers in the area often raise detailed questions, including who owns the rights, and whether it's best to convey or retain all or part of the mineral interests.
Who Owns Minerals?
Owners of property in many residential neighborhoods typically are not aware of the precise extent of the mineral interest they may own. One may own all or only a portion of the mineral interest. Further, the mineral interests may have been leased. Determining who owns the mineral interests, whether the mineral interests have been leased, and who holds rights under any leases requires an expert (such as an oil and gas attorney) to review the chain of title and formulate an informed opinion. While general information about neighborhood activity, including the status of past or proposed lease agreements and bonuses may be available through local sources such as HOAs or neighborhood groups, such information should always be verified by an attorney. In most cases, but by no means all, property owners who currently own mineral rights make efforts to retain those rights when selling the property.
Mineral Clauses Can Be Legally Complex
Real estate brokers are not familiar with the status of title to the mineral interests of a given parcel or property or the value of mineral interests or mineral leases. Such transactions may require the negotiation of complex legal clauses to accurately reflect the rights and obligations of the parties (for example, royalties, executory rights, taxes, lease bonuses, ingress or egress rights, restrictions on drilling and explorations rights, indemnities, termination rights, environmental consequences, etc.) Real estate brokers and salespersons are not attorneys and may not engage in the unauthorized practice of law. A broker or salesperson in not permitted to author a clause in a contract that is legally complex or that constitutes more than a business detail or factual statement.
Contract Forms
The residential contract forms promulgated by the Texas Real Estate Commission and the commercial contract forms published by the Texas Association of Realtors provide that the seller will convey to the buyer all of the seller’s rights associated with the property, including the mineral interests and rights held by the seller (subject only to those items listed in Paragraph 6 or as otherwise stated in the contract.) If a party wishes to address minerals differently, the party should see the assistance of legal counsel familiar with such transactions.
Resources
One may find general information related to mineral estates and mineral leases through many sources, including but not limited to: (a) the Real Estate Research Center (www.recenter.tamu.edu) and (b) the Railroad Commission of Texas (ww.rrc.state.tx.us). There are many other useful sources that one can access via the Internet through most Internet search engines.
