After the prospect has been delineated, the area of interest is given to a landman. His job is to determine who has ownership. There exist two legal ownerships to the land. They are the surface rights and the mineral rights. The surface and mineral rights owners are often the same but the rights can be separated and different parties can own them.

The surface owner can ranch or build structures on his land. The minerals owner can drill for oil and gas and owns any that is found.

A mineral lease must be obtained from the mineral owner (lessor)before drilling on a well can begin. It is the responsibility of the landman to determine who owns the mineral rights. He can do this at the county courthouse or parish courthouse. The landman will approach the owner of the mineral rights with a lease, a legal document. When the mineral owner signs the lease, he will receive a bonus and royalty. The bonus is up front money and the royalty is a percentage of all of the gross revenue from the oil and gas from that lease. The lease’s owner (the lessee) has the right to explore and/or drill for gas and oil on that property.

A lease that has a time limit on it is referred to as the primary term. If commercial production from the land has not been established prior to the primary term expiring, then the lease will become invalid. But if commercial production has been established, then the life of the lease is extended to cover all future production.

Leases are actual property that can be bought, sold or traded. If a person already has a lease you want, you can request a farmout that will give you the right to drill on that acreage.

A lease plat is a document that is included along with a drilling proposal to identify the acreage where the well will be drilled.