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Mineral Rights | Russell T. Rudy Energy LLC

Ownership of minerals is ordinarily limited to that which does not require the destruction of the surface to accumulate.

Some states, such as Texas, use what is called the “surface destruction test” to determine if getting down to the minerals would destroy the rights, full use and enjoyment of the surface owner.
Ordinarily the surface owner retains the rights to hard minerals such as lignite, coal or uranium which require open pit excavation . If the surface owner of the entire “fee” interest (meaning he owned 100 percent of the land from the surface to the center of the earth) wanted to, he could in theory assign his mineral interest and include the rights to mine for hard minerals, coal, gold, silver and the like. In areas where there is even a mere possibility of hard mineral surface mining, such a conveyance would place a permanent cloud over the surface ownership, in that it would be perpetually subservient to the right to mine and in always at risk for surface destruction and loss of use.

If you own a mineral interest and do not own the surface it is more likely that you own rights to the hydrocarbons and not any hard minerals.

Having acquired all types of minerals, royalties and even gold claims over the last thirty years, we have seen and owned practically every type of mineral, royalty, override, production payment, working interest, including interests in salt dome gas storage rights and Minnesota gold mining rights. Interestingly, Minnesota is among the states that tax mineral interest owners who own severed mineral interests whether they are producing or not.

Every year we re-evaluate to determine whether or not it is worth paying the annual taxes on non-producing Minnesota minerals or allowing title to lapse back to state ownership.

In researching Minnesota mineral activity, we discovered that there is a resurgence of Gold Mining currently being undertaken through a coring method of mining. In fact, in that land of a thousand lakes, there has been recent activity from a few major gold mining companies actually prospecting off of barges. They are able to conduct all of their coring and mining activity on top of the water and extract rock samples and ore down through the water from beneath lakes and ponds. Fortunately, our mineral ownership includes any hard mineral rights. The possibility that a company might offer to lease our minerals is reason enough to keep paying mineral taxes for yet another year.

In contrast, an oil and gas producing state like Texas, primarily taxes only producing mineral interests. However, there are a few counties in Texas with minimal oil and gas production that now tax severed minerals on a per acre basis. Although paying fifty cents or a dollar per acre seems reasonable on its face, holding non-producing minerals in these usually unproductive counties for an indefinite time makes questionable economic sense.