A mineral owner is an individual who is entitled to receive monthly or annual royalty income from operators producing crude oil or natural gas because they own the mineral property, not to be confused with the “Surface” property.  The mineral property is under the surface.

Mineral interest is a property interest that is created when the sale of minerals such as hydrocarbons is executed by the mineral deed or an oil and gas lease. The owners mentioned on such deeds are mineral interest owners. However, since these owners do not have expertise in exploring minerals themselves, they can lend their mineral ownership rights to oil operators (oil companies).

Understanding what it means to be a mineral owner is just the first step in the journey of managing mineral rights. Once you have determined ownership, the next stage often involves evaluating whether to lease those rights. The leasing process typically begins when an oil and gas company expresses interest, offering terms that allow them to explore and potentially develop the resources beneath your property. If the lease is signed, the company takes on the risk and cost of exploration. Should they find commercially viable resources, the development phase begins, which could involve drilling and setting up infrastructure. Once production starts, mineral owners receive royalty payments based on the terms of the lease, marking the transition from potential to profit. This entire cycle—from ownership to leasing, development, and production—is what allows mineral owners to fully realize the value of their rights, often transforming untapped potential into ongoing income.

What is an oil and gas lease?

As a mineral owner, you hold the rights to the resources beneath your property, but those resources often need specialized companies to extract them—that is where an oil and gas lease comes into play. An oil and gas lease is an agreement between two parties (the mineral owner and an oil and gas operator (or oil company) to allow oil and gas exploration and a production organization (a lessee) along with the crew and drilling equipment to access the property and minerals which a lessor owns. An oil and gas lease can also be defined as an area of land allotted to an exploration and production organization for drilling activities. The piece of land is usually spread over large acreage.

Do I own Colorado mineral rights?

Before you can lease your rights, it is important to first determine whether you actually own the mineral rights in Colorado. Determining whether you own mineral rights in Colorado can feel like piecing together a puzzle. Mineral rights are often severed from surface rights, so even if you own the land, someone else might own what’s buried underneath—or vice versa. To figure out if you hold these rights, you will need to dive into the property’s history, including deeds, title records, and any past transfers of mineral interests. This usually involves tracking down county records in the area where the property is located, which can be a tedious but necessary step.

People acquire mineral rights in various ways, often through inheritance, purchase, or by retaining them when selling surface property. In many cases, mineral rights have been passed down through generations, with family members inheriting them without realizing their value. Others may have purchased mineral rights outright as a separate transaction, independent from buying land. It is also common for property owners to sell the surface land while keeping the mineral rights, a process known as severing the rights. Over time, these rights can be sold, leased, or transferred, sometimes resulting in ownership being spread across multiple individuals or entities. For those who inherit or purchase mineral rights, it is important to understand what they own and how they can benefit from it, whether through leasing, selling, or retaining the rights.

It is also possible that mineral rights have been inherited or passed down through generations without your knowledge. In many cases, families do not even realize they own mineral rights until they are approached by an oil and gas company looking to lease them. If your family has a history of land ownership in Colorado, especially in mineral-rich areas, there is a chance those rights could have been passed to you without being explicitly mentioned in estate documents. When mineral rights are inherited, they often go through the probate process to transfer ownership. If the original owner lived out of state, the mineral rights might require an ancillary probate process in Colorado to officially transfer them to the heirs.

Without proper probate or ancillary probate, the title to these mineral rights remains in the deceased’s name, creating issues down the road. For example, an oil and gas company might discover the mineral rights are tied up in probate when trying to negotiate a lease, causing delays and complications. Additionally, until the probate process is completed, heirs may have legal issues claiming royalties or managing the mineral rights.

It is important to address these legal steps sooner rather than later. Delaying probate or ancillary probate can create a legal tangle that makes it harder to clear the title, potentially leading to missed opportunities and extra costs. By handling the transfer of mineral rights early on, you can ensure that the mineral rights are transferred smoothly and are fully available for your use or potential income opportunities.

How much are my Colorado Mineral Rights Worth?

The value of Colorado mineral rights can vary significantly depending on a variety of factors. Key considerations include the location and size of your mineral interests, the type of resources present (oil, natural gas, helium), current market demand, and whether there are active leases or production taking place. Proximity to ongoing development or drilling activity can also impact value, as areas with established production tend to fetch higher prices. Additionally, the duration and terms of any existing leases, as well as the history of royalty payments, play a role in determining worth. Given the complexities involved, having a professional valuation or consulting with a mineral rights expert can provide a clearer understanding of what your specific interests might be worth in the current market.

At the Law Office of Josh Krieg, we specialize in helping clients navigate the complexities of mineral rights and ancillary probate across Colorado, Wyoming, and North Dakota. Whether you are dealing with probate issues, transferring mineral interests, or need guidance on estate planning strategies, our experienced team is here to help. Reach out to us at 970-420-7491 or email office@jkrieglaw.com and let us help you with your legal challenges.