Non-executive Mineral Rights Owners Have Rights in Texas Oil and Gas Disputes

In oil and gas disputes, mineral rights holders that do not have executive rights may have claims against the executive rights holder. With substantial money at stake and sought after minerals in the Texas soil, greed, spite, and games can sometimes get in the way of everybody benefiting from mineral exploration.

Typically, disputes between executive and non-executive rights holders arise because there are questions about the duties that are owed to the non-executive mineral rights owners. Historically, this duty is called the duty of utmost good faith and fair dealing. For example, the executive rights holder should generally seek the reasonable benefits from developing the land and allow the non-executive owner to obtain such benefits. That said, an executive owner has no right to pool non-executive owners. An executive owner, however, should notify the non-executive owners of the execution of a pooled lease so that those owners can choose to ratify it or not.

Recent Texas Supreme Court rulings have clarified the fiduciary duties that executive rights holders owe to non-executive mineral rights owners. If the non-executives are deprived of benefits that they should be receiving, they may have a claim against the executive rights holders. In cases that have sided with non-executives, this can mean the executive’s rights can be cancelled along with any leases or contracts they signed that violate duties to the non-executive rights holders. Actual and exemplary damages can also be sought.

When mineral rights holders have an oil and gas dispute, they should consult with an experienced Texas oil and gas lawyer to ensure their rights are being upheld and that further harm is not being done. To learn more, contact Austin oil and gas attorney Gregory D. Jordan at (512) 419-0684.