Quote:
Originally Posted by dalmations202
This is how I understood it as well.
With that said, if you taxed the mineral rights, on non-producing stuff, then it wouldn't get so demolished, and land owners would have more rights with it.
As it is, there is no reason to give up mineral rights. They only cost me "if" it has something producing on it. It might pay off "if" they find something in the future. But, leasing the oil rights, and other issues which cause only the lawyers to profit happen, when it gets split drastically.
If the mineral rights stayed with the landholder, then large oil companies would own all the land. I understand that one.
If the mineral rights went back to the landholder, IF it had been 10 years without production, or you are taxed for them, then people wouldn't keep them just to keep them.
As it sits on my land, if I didn't have controlling interest of the mineral rights, the controlling interest mineral person could lease my land, and them put a well on it -- without my OK. Now I could sue for damages, but only surface damages and not for the loss of value based on the fact that no one wants to live right next to an oil/gas rig. I would also only get surface % of the minerals.
Plus the laws allowing horizontal drilling are just as horrendous.
In fact, this last year, the last 22 acres that we bought -- we could only get 50% of the mineral rights from the guy -- he kept the other 50%. Then he died, and his daughter in law signed a lease agreement on our land @ much less money than we signed the rest of the land for. PO'd me because we were landholder and had 50% minerals, but she signed the lease. That was ignorant how that worked.
Back to my point. If you could send mineral rights back to the land owner -- when it isn't producing -- and tax the mineral right (which would keep people from just diluting them farther and farther) -- then you could add taxes, and value.
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In the situation above, do you get 50% of the royalties for the well placed on your property since you own 50% of the mineral rights? Or did the other person somehow manage to get all of it? What exactly is your legal position now?
Anyway, I understand everything you said.
In the current system, those tiny fragmented mineral rights usually end up getting bought out by the oil/gas companies drilling them. Chesapeake sends me an offer to buy out the mineral rights every year. I will probably sell it to them at some point just to be done with it.
So, that could be even worse for a land owner. Now, it is Chesapeake (or a similar company) who actually owns the mineral right and is also drilling it (double profit). And, certainly, they are going to build wells and do whatever else fits their business model with no regard for your concerns.
But, if you did what you want to do, then people with tiny mineral rights would sell out to the oil/gas companies even faster. And, those with mineral rights that aren't worth anything would also potentially sell those mineral rights more readily also.
I don't know how that idea would actually result in the landowner getting the mineral right back. And, would the landowner even want that mineral right back if wasn't worth anything and would cause a higher tax to be placed?
I'm just not sure how the idea would help you.
Are you wanting the mineral right (and its tax you proposed) just to prevent the mineral right owner from signing leases for wells and similar construction? Is it worth that?