How Do Mineral Rights Work in Texas?
The Short Answer: In Texas, owning the land (the surface) does not automatically mean you own what is beneath it (the minerals). Because Texas law treats surface rights and mineral rights as two separate “estates,” they can be owned by completely different people. If you are buying land, you must explicitly negotiate for the mineral rights if the seller owns them. If you are selling, you can choose to retain your mineral rights to keep future oil and gas royalty income, or convey them to the buyer to increase the sale price of your property.
For landowners in areas like Fayette, Lavaca, and Colorado counties, understanding mineral rights isn’t just legal trivia—it is a critical factor in your property’s value and your control over how the land is used.
The “Split Estate” Explained
Texas operates under the legal concept of a Split Estate. This means real estate is divided into two distinct parts:
- The Surface Estate: This gives you ownership of everything visible: the dirt, grass, trees, water, your home, and any structures you build. You control farming, ranching, and living on the land.
- The Mineral Estate: This grants ownership of subsurface resources—primarily oil and gas, but also coal and certain mined ores.
Key Insight: In Texas, the Mineral Estate is legally considered the “dominant estate.” This means the mineral owner (or the oil company they lease to) has the legal right to use as much of your surface as is “reasonably necessary” to extract the minerals, even if you own the surface.
How Fractional Interests and Percentages Work
It is very rare today for a single person to own 100% of the mineral rights under a large Texas ranch. Because mineral rights are real property, they are passed down through generations.
If a grandfather owned 100% of the minerals and left them to his four children, each child received a 25% fractional interest. If those four children pass their shares to their children, the percentages divide further. Over decades, a single 100-acre tract might have dozens of fractional mineral owners, each owning a tiny percentage (often expressed as a decimal, like 0.03125) of the entire tract.
How a $10,000 Royalty Pool Splits (Example)
When an oil or gas well produces revenue, the payout is divided based on the overall lease royalty rate and your specific fractional ownership. Here is how a hypothetical $10,000 total monthly royalty pool splits among different fractional interest owners:
| Your Fractional Ownership | Decimal Equivalent | Your Monthly Royalty Payout |
| 100% (Full Mineral Owner) | 1.0000 | $10,000.00 |
| 50% (Split with Co-Owner) | 0.5000 | $5,000.00 |
| 25% (Inherited by 4 Children) | 0.2500 | $2,500.00 |
| 12.5% (Inherited by 8 Grandchildren) | 0.1250 | $1,250.00 |
| 3.125% (Generational Fractional Share) | 0.03125 | $312.50 |
Note for Landowners: Your actual check depends on the total volume produced by the well, the current market price of oil or gas, the lease royalty rate (typically 12.5% to 25%), and your personal fractional share shown above.
Should You Retain or Convey Mineral Rights?
Whether you should fight for mineral rights depends on what side of the transaction you are on.
For Sellers
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Retaining Minerals: If your land is in an active drilling area, holding onto the mineral rights ensures you (or your heirs) will receive future royalty checks. However, you must include a specific mineral reservation clause in the deed. If you do not explicitly reserve them, they automatically transfer to the buyer.
- Conveying Minerals: If you want top dollar for your property, including the mineral rights is a massive selling point. Buyers will often pay a premium for “surface control.”
For Buyers
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The Search for Control: Your primary goal when buying land should be acquiring enough mineral rights to protect your surface. If you buy a property but own 0% of the minerals, an oil company could theoretically build a pad site in your front pasture.
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Surface Waivers: If the seller refuses to convey the minerals, you can negotiate a “Surface Waiver” or “Non-Surface Participation Agreement.” This allows the seller to keep the royalties but legally prevents them (or their lessees) from ever setting foot on your surface to drill—they would have to drill horizontally from a neighboring property.
Navigating the Deal: 3 Rules of Thumb
When negotiating land deals in Central Texas that involve mineral rights, keep these rules in mind:
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Do not rely on the tax roll: The county tax appraisal district only taxes minerals if there is an active, producing well. If there is no well, the tax office does not track who owns the minerals.
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Order a Title Commitment early: Your title insurance company will perform a search to find any existing mineral leases or previous severances. Review this document carefully during your option period.
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Use specific contract addendums: Standard real estate contracts do not address mineral rights perfectly. You must use the TREC (Texas Real Estate Commission) “Addendum for Reservation of Oil, Gas and Other Minerals” to clarify exactly what percentage is staying and what is going
At Bubela Real Estate, we understand that what is under the dirt can be just as valuable as the dirt itself. Whether you are buying a recreational property in Colorado County or selling a generational family farm in Fayette County, our agents have the expertise to help you navigate split estates, negotiate surface protections, and ensure your property rights are secure.
