In Texas, land ownership has always carried a certain weight to it. It’s more than fences, water troughs, and acreage totals. Beneath the grass, limestone, and caliche roads may sit something far more valuable than the surface itself: the mineral estate.
For many Texas landowners, mineral rights are one of the most misunderstood—and financially significant—parts of ranch ownership. They can create generational wealth, family disputes, unexpected surface activity, or simply confusion during a sale.
And around here, confusion usually gets expensive.
At Stearns Ranch Realty Group, mineral rights conversations are a regular part of helping families buy, sell, and steward Texas ranch land. Whether we’re dealing with a long-held family ranch, inherited acreage, or a recreational property with production potential, understanding the mineral position matters.
Because in Texas, owning the ranch doesn’t always mean owning what’s underneath it.
The Surface Estate vs. The Mineral Estate
Under Texas law, land ownership is divided into two separate estates:
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The Surface Estate — the dirt, grass, improvements, water features, roads, and everything you can physically walk on.
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The Mineral Estate — the oil, gas, and other minerals beneath the surface.
Originally, these estates are unified. But over time, they are often “severed,” meaning ownership of the minerals becomes separate from ownership of the surface.
This is extremely common across Texas, particularly in areas with historical oil and gas activity.
A ranch owner may control thousands of acres on the surface while owning none of the minerals beneath it. Conversely, someone may own mineral rights under land they’ve never physically stepped foot on.
Unless minerals are specifically reserved or previously severed, they generally transfer with the property when land is sold.
That small paragraph buried deep in an old deed? Sometimes it’s worth millions.
Source: Texas Oil & Gas Association (TXOGA)
https://www.txoga.org/mineral-owner-rights/
What Rights Come with Mineral Ownership?
The mineral estate carries a powerful bundle of rights, including:
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The right to explore and develop the minerals
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The executive right (the right to lease the minerals)
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The right to receive lease bonus payments
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The right to receive royalties from production
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The right to receive delay rentals
In practice, most mineral owners do not drill wells themselves. Instead, they lease these rights to an oil and gas operator through an oil and gas lease.
That lease is where things get interesting—and where landowners need to pay attention.
Why Mineral Rights Matter Financially
In productive areas of Texas, mineral ownership can dramatically change the economics of a property.
Typically, an oil and gas lease includes:
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An upfront lease bonus payment (paid per net mineral acre)
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A royalty percentage on future production
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A defined lease term, often around three years
Bonus payments vary wildly depending on the area and market conditions. In less active regions, they may only amount to a few hundred dollars per acre. In highly productive shale plays, they can reach thousands per acre.
Royalty interests typically range from 20% to 25% of gross production revenue.
And yes—gross revenue matters.
That means the royalty is generally calculated before drilling and operating expenses are deducted.
For example, during peak activity in the Eagle Ford Shale, some landowners received substantial upfront bonuses coupled with long-term royalty streams that changed the financial trajectory of entire families.
Of course, not every lease becomes a producing well. Some expire quietly. Others become incredibly valuable.
That uncertainty is part of why mineral rights are both fascinating and complicated.
The Mineral Estate is Dominant
Here’s the part many surface owners discover too late:
Under Texas law, the mineral estate is considered the dominant estate.
That means the mineral owner—or their lessee—has broad rights to reasonably use the surface to explore for and produce minerals.
This may include:
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Building roads
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Conducting seismic testing
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Installing pipelines
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Drilling wells
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Using water for operations
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Constructing production facilities
That can come as a surprise to landowners who believed they had full control over their property.
Texas courts have consistently upheld these rights for decades.
Source: TXOGA Surface Owner Rights
https://www.txoga.org/surface-owner-rights/
Now, this doesn’t mean operators can behave recklessly. There are limits.
The Accommodation Doctrine: Some Protection for Surface Owners
Texas law does provide a narrow but important protection known as the Accommodation Doctrine.
In simple terms, this doctrine may require a mineral operator to accommodate existing surface uses—such as ranching or farming—if reasonable alternatives are available.
It’s not a silver bullet. But it can provide meaningful leverage in certain situations.
Many modern leases also include negotiated:
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Surface damage agreements
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Water use restrictions
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Setback requirements from homes or improvements
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Road maintenance provisions
Strong leases matter.
So does experienced guidance.
Understanding the “Executive Right”
One of the more overlooked issues in ranch transactions is the executive right—the authority to lease the minerals.
Interestingly, the holder of the executive right may not own 100% of the minerals themselves.
This can create incredibly complex ownership structures, particularly on older ranches where mineral interests have been divided across generations through inheritance and prior conveyances.
We regularly encounter situations where:
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Ownership records are fragmented
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Heirs are unaware of their interests
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Old reservations create confusion
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Surface and mineral rights overlap in unusual ways
Sorting through those issues takes patience, diligence, and often collaboration with attorneys, title companies, and landmen.
Oil & Gas Leases: Read the Fine Print
Most landowners are surprised by how dense oil and gas leases can be.
The “standard” forms are often anything but simple.
At minimum, a lease should clearly define:
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The legal description of the property
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The primary and secondary lease terms
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The royalty percentage
But beyond those basics, details matter immensely.
Clauses involving:
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Retained acreage
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Continuous development
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Pugh clauses
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Surface usage
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Water rights
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Seismic activity
…can significantly impact a landowner’s long-term position.
And yes, some of these clauses are exactly as exciting as they sound.
“Pugh Clause” might sound like the name of a grumpy ranch foreman, but it’s actually an important provision that can prevent a company from holding an entire ranch under lease with only minimal production.
Water and Fracking Concerns
No discussion of minerals in Texas is complete without talking about water.
Hydraulic fracturing (“fracking”) has understandably raised concerns among landowners over groundwater protection.
The industry maintains that modern wells utilize multiple layers of casing and cement designed to isolate production zones far below freshwater aquifers.
Texas groundwater itself is generally considered part of the surface estate, not the mineral estate.
That distinction becomes increasingly important as water grows more valuable across Texas.
Source: Groundwater Governance
https://www.groundwatergovernance.org/can-dominant-estate-drill-water-wells-oil-and-gas/#1
Final Thoughts from Stearns Ranch Realty Group
Mineral rights are one of the most powerful—and misunderstood—components of Texas land ownership.
They can create opportunity.
They can create conflict.
And they can dramatically influence the value, marketability, and future use of a ranch property.
Unfortunately, many landowners don’t fully understand their mineral position until they’re already deep into a transaction.
That’s why preparation matters.
At Stearns Ranch Realty Group, we believe ranch representation should go beyond acreage totals and pretty photography. We help clients think critically about the long-term realities of land ownership—including minerals, water, access, and legacy considerations that can shape a property for generations.
Because stewardship of Texas land means understanding both what’s on the surface… and what lies beneath it.
Chris Stearns
📞 210-425-5956
📍 Fredericksburg, Texas
Stearns Ranch Realty Group
Stewardship of Land, Family, and Process.
