As in other oil and gas producing states, understanding Texas laws regarding legal ownership of such resources is important if ownership is ever questioned. Based on a number of different ownership theories, experienced oil and gas law firms explain that ownership of resources within a parcel of land can become a complex situation. Because of this, it is essential that an owner of resource-producing property in Texas work with oil and gas attorneys to establish their ownership of such property and understand their rights to any resources found on that property.
The Rule of Capture as Applied to Ownership
Experienced oil and gas attorneys say the Rule of Capture basically states that whomever owns the land on which a well is dug, and from which oil or gas is extracted, owns those resources. This rule has been in effect in the United States since the 1800’s. It is based on the idea that ownership of land also includes ownership of whatever is under or within that land.
Arguments Against the Rule of Capture
The main argument against the Rule of Capture is that since resource deposits may extend over multiple properties and can easily be captured by just one well on a piece of property, ownership of these resources should not go solely to the person who captures them. With a few exceptions, this argument is considered invalid by experienced law firms that handle oil and gas issues as well as the courts.
Oil and gas lawyers state there are many reasons for this, including the fact that it is impossible to determine how much of a resource resides on one property before migrating to another. Therefore, based on these limitations, it is generally accepted that the owner of the land where the well is dug becomes owner of whatever is extracted from that well. If neighboring landowners wish to retain some of those resources, they must invest in digging their own wells to extract that same resource.
Exceptions to the Rule of Capture
Oil and gas ownership rights often involve the expertise of oil and gas attorneys, in cases where slant drilling has occurred or if there are questions about how a resource was extracted. Lawyers experienced with oil and gas issues state that exceptions also exist concerning storage of already claimed resources – such as underground storage of natural gas already captured – and in instances where negligent or incorrect capturing has caused loss to neighboring owners, eliminating their portion of the resources as a result. Every situation is different, so exceptions to the Rule of Capture must be considered on a case-by-case basis.
Considering the complexity of these and other oil and gas issues, including surface right protection, pooling provisions, bonus and royalty rates, and other aspects of an oil and gas lease, it is imperative that the signing of an oil and gas lease should be carefully planned with the help of qualified oil and gas lawyers who know the industry as well as the implications that come with land ownership in an oil or gas producing state like Texas. It is the goal of oil and gas attorneys to protect landowner rights by ensuring that those who rightfully own such resources retain all of the privileges of that ownership!