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Leasing and Pooling
State of Texas
Oil and Gas Rights
www.glo.texas.gov
$12.3 Billion to the
Texas Permanent School Fund
Relinquishment Act
1895-1931
Surface Owner Acts
as Agent
1/6 – 1/8
Free Royalty
Section II B:
Preferentially Leasing to
Adjacent Mineral Owners
Pooling Approval
Force Pooling
Riverbeds

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Week 3 presentation

Editor's Notes

  1. The State of Texas owns vast land and mineral holdings. Proceeds from GLO leases benefit the Permanent School Fund.
  2. Oil and gas leasing is a primary function of the General Land Office.
  3. Proceeds from state leases benefit the Permanent School Fund and exceed $12.3 billion to date.
  4. Public School Land is leased at a sealed bid sale and nominated prior to the sale through a nomination process.
  5. Between 1895-1931 the State of Texas sold surface and reserved minerals including oil and gas through the Relinquishment Act.
  6. The surface owner negotiates and executes the oil and gas lease and receives ½ of any bonus, rental and royalty as compensation for acting as agent and in lieu of surface damages. However, the lease is not valid until the GLO has approved the terms.
  7. The State may have reserved a Non-Participating Royalty Interest or Free Royalty when minerals were sold. The NPRI burdens the mineral owner's lease. The NPRI gives the State a percentage of production, usually 1/6 or 1/8. A certified copy of the lease must be filed with at the GLO. Due to the filing requirement, the public will have access to the lease terms made with the mineral owner.
  8. The State of Texas may own minerals underlying Highway Rights-of-Way. Adjacent mineral owners have the preferential right to lease State highway ROW minerals.
  9. Anytime a tract of State owned land is placed in a production unit with any other tract of land, including another state-owned tract, the GLO must approve the combining or pooling of the different tracts into a single production unit. Highway Right-of-Way leases contains pooling authority. Therefore, approval is unnecessary if the lease is a Highway Right-of-Way lease.
  10. An owner producing mineral from lands adjacent to a State owned riverbed tract might be compelled to include the river tract with the adjacent production unit. In this instance the State of Texas would be force pooling the lease.