This feature originally appeared in the November 17th edition of the Pittsburgh Business Times.
Q. How do I sell my property but maintain my mineral rights?
Advice: The first step is to understand and utilize the correct terminology. The terms “minerals” and “oil and gas” are often used interchangeably. However, if you live in Pennsylvania and are interested in retaining the natural gas rights associated with the Marcellus and Utica shale formations, you should use the term “oil and gas”.
Real estate can be divided into three separate and distinct estates which can be held by one owner or multiple owners. These estates are (1) the surface estate, (2) the subsurface estate, and (3) the support estate. In order to sell the surface estate and retain ownership of the oil and gas (subsurface) estate, the two estates must be separated, so a severed estate is created. To create a severed estate and retain your oil and gas rights when selling property, an “oil and gas reservation clause” needs to be included in the deed. Such a clause can be basic or complex and comprehensive. It is possible to reserve the oil and gas rights for a specified period of time, reserve a fractional interest of the rights where the seller and buyer agree to split the ownership of the oil and gas, or even reserve a certain shale formation.
It is important to consult with an attorney with experience in real estate and oil and gas to ensure that you are advised of the different options and considerations when the sale of real estate involves oil and gas rights and to be sure the transaction is handled properly.
Kit F. Pettit