If you are a landowner in Carbon or Stillwater County, now is the time to determine whether or not you own the mineral rights under your land.
Unified vs. split estates
If you are lucky, your estate is unified, or fee simple: the mineral and surface rights are held together. More often, minerals have been severed from the land, either because the federal government reserved minerals in its initial homestead claims, or because the owner has sold off the mineral rights to a property.
A landowner can also hold a fractional ownership of the mineral rights. Fractionalization occurs when an owner sells a portion of the mineral rights, or leaves a portion to multiple heirs. Fractional mineral interests are usually referred to as tenants in common.
How do you find out who owns mineral rights to your property?
The following information has been obtained from various sources, including interviews with the Clerk and Recorder in both Stillwater and Carbon counties, and an independent landman. Your property is important to you, and I strongly suggest you determine for yourself the best way to find out the legal status of your estate.
- You need a legal description of your property. You can find this on your property tax bill. If you don’t have it, staff at both Stillwater and Carbon counties will help you find it.
- Go to the office of the county clerk and recorder. Addresses are shown at left. The records of land transactions are held in the “public room,” because the public is allowed to go in and look.
- Staff in both counties will “help you get started.” This means finding the right plat book and locating your property. Deed numbers will be listed.
- Once you have the deed numbers, you look up the individual deeds and determine whether mineral rights have ever been severed or withheld. If they have been severed, a separate mineral deed should be referenced.
- You will need to track down the transaction history. Each transaction will have its own deed, so you go back transaction by transaction, ideally until you get to the land patent.
Both counties said a search can take several hours, depending on how many times the rights have been sold and whether the mineral rights have been severed. Based on conversations with the clerk and recorder offices, Carbon County has much more computerized information than Stillwater County. When you go to the Courthouse, staff will show you how to access the digitized information.
If you don’t have the time to do this, you can hire a landman to do it for you. Many landmen work for oil and gas companies, but you can go to the site of the Montana Association of Professional Landmen, which maintains a directory of its members by affiliation, to find an independent to do this for you.
I spoke to a local independent landman based in Columbus, and he told me that his rates are $65/hour, $500/day. The actual cost of a search varies by size and complexity of the historical record.
He told me that searches in Stillwater County are more difficult than in Carbon County because less is online, and the records are organized in a “blind index,” which makes it more difficult to find an individual property. “You have to go through everything,” he told me. He said that he sometimes recommends use of an abstractor, who has the ability to research the history of a title back to the land patent. The reason, he told me, is that “Stillwater County was an ag county, and years ago nobody was thinking about mineral rights. So basically they just didn’t keep very good records.” The rate for an abstractor is about $100/hour.
Assessing the value of the oil under your land
The value of mineral rights is determined by assessment. Since future oil production is uncertain, estimates of value may vary with assessments of the amount of oil that can be produced. An income approach is commonly used to assess value. This means that the amount of recoverable oil is estimated and then multiplied by the expected market price of the product. The costs of production must be taken into account. A discount is applied for the time of production.
To determine what the value of minerals is, an assessment can be made. Licensed appraisers with experience in mineral assessment should be used. Alternatively, many mineral brokers are willing to quote prices for mineral rights. An owner could ask for a bid on minerals from one of these buyers. A search for mineral rights brokers will give you plenty of options.
If your mineral rights are severed, you may want to consider reuniting them to your land ownership. The cost of doing this varies with the expected value of the oil underneath. As the landman I spoke to told me, if this is something you are considering, the time to look at it is now, because no oil has been found in the area and the assessed value will be less. If the Belfry exploratory well is successful, the assessed valuation will likely increase significantly.
An opportunity for community action
The more we understand and share publicly available information, the more we can coordinate our efforts to deal with potential drilling. If we can map existing leases and mineral rights, we can understand where drilling is likely to take place and who will be doing it. A lease map is being developed. You may be asked to share your information about who owns your mineral rights.
Be on the lookout for more information and a request to share your information.
Special thanks to Montana State University Extension for their excellent resources on this topic.
Coming Soon: Dos and don’ts if you are a mineral rights owner; dos and don’ts if you are the surface owner of a split estate.
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One more thing: The Stillwater County Clerk and Recorder has posted a “Deed Scam Notice” on their web site. Be aware.