If you own land and own the minerals on that land that are extracted, you may be entitled to a portion of the profits from those sales. Mineral rights apply to land owners, giving them the ability to profit from the minerals that are located on their property, so long as they have deeded rights to those minerals. They typically apply to all types of subsurface resources including oil, natural gas, metals, ores and other raw materials.
Those who are buying land or currently own a tract will want to be aware of their mineral rights, as they can have a significant impact on ownership. For instance, a property might be located in a hot area for natural gas exploration, meaning a landowner may get a cut of the profit of any natural gas that is extracted.
"Many Ohio landowners have seen their property values skyrocket over the last few years, with investors and oil/gas producers leasing and drilling tracts of ground that were only previously used for cattle grazing or growing crops," said Brian Bauer, a land specialist at Mossy Oak Properties Land Sales and Services in Rockbridge, Ohio. "Rural land tracts in our area of the country that were valued at $2,000 per acre a few years ago are now seeing values topping $10,000 per acre."
Depending on the minerals located on a tract of land, an owner could be in for a significant payday. As Bauer pointed out, with the increased energy production in the United States, landowners in certain parts of the country are reaping the benefits of the domestic natural gas boom in particular.
"In some circumstances, the oil/gas companies are paying more than a 20 percent gross royalty from these shale wells," Bauer added. "Some landowners are looking at nearly $1,000 per acre per month for their cut of the oil/gas royalty in the wet gas areas of the Utica and Marcellus shale play. Here in Ohio, mineral rights are considered real estate. [In some] some states they are not recognized as actual real estate."
A right to exploit property
Buying and selling mineral rights can be tricky, which is why we suggest discussing what rights you may or may not have with a real estate attorney. If you sold the mineral rights on your land to a mining company, they will most likely have the legal authority to exploit that property for their specific needs. The rights to extract minerals can last for decades to come, meaning you will have to be ready for the consequences of selling those rights. They can be sold again or even leased to other energy companies. However, the potential royalty income from the revenue of the extracted minerals will likely make it a worthwhile investment.