Mineral Rights

Owning mineral rights means owning the oil, gas, and other subsurface resources beneath a tract of land, separate from whoever owns the surface, and that split is more common in North Dakota and Montana than most new owners expect.

The mineral estate is the base interest everything else in the Bakken gets carved out of. Lease it, and the operator gets the right to drill in exchange for a bonus and a royalty. Reserve a royalty out of your own interest before selling, and you've created a non-participating royalty. Assign an operator a slice of production in exchange for services, and you've created an overriding royalty. All of it starts from the mineral estate itself, which is why understanding what you actually own matters before any of those other terms make sense.

In practice, most Bakken mineral owners we talk to hold what's called a full mineral interest, meaning they own the right to lease, negotiate bonus and royalty terms, and receive production income proportional to their share of a spacing unit. That's different from owning just a royalty carved out of someone else's mineral estate, which limits you to income with no say in leasing decisions.

How the Split from Surface Happened Historically

A lot of North Dakota and Montana mineral ownership traces back to homestead-era land patents, where the original settler received both surface and mineral rights together, and later generations severed the two, sometimes through a sale that reserved minerals, sometimes through a straightforward mineral deed. Railroad grants and some federal reservations also carved out separate mineral ownership early on. The result today is a patchwork where surface owners farming or ranching a section may have no mineral interest at all, while the mineral owner may never have set foot on the property.

This history matters practically because it means your mineral rights are entirely independent of what happens on the surface. A change in surface ownership, a new farm operator, a sold ranch, doesn't touch your mineral interest unless your deed specifically bundled the two.

What You Control as a Mineral Owner

As the mineral owner, you control whether to lease and to whom, subject to negotiating bonus and royalty terms with an operator, and you retain the right to receive your proportionate royalty once a well in your spacing unit produces. What you don't control is whether an operator ultimately drills, since that's a business decision the operator makes based on economics across their whole portfolio, not something the mineral owner can force. You also don't control the surface access process for drilling if you sold the surface separately, since a Montana or North Dakota operator typically negotiates surface use directly with whoever owns that half of the estate now.

This distinction trips people up when they assume owning minerals gives them a say in where a pad goes or how surface disruption is handled. Usually it doesn't, unless your deed retained both.

Selling the Mineral Estate vs. Selling a Royalty

Selling your mineral rights outright transfers the entire bundle, leasing authority and all future royalty, to the buyer permanently. Some owners instead sell just a royalty interest carved from their minerals, keeping the executive right to negotiate future leases while giving up a portion of production income. Which makes more sense depends on whether you value retaining any control over future leasing decisions or simply want to maximize upfront liquidity, since a full mineral sale generally commands a different structure than a royalty-only sale.

Depth and Formation Limits Within the Mineral Estate

Not every mineral deed conveys rights to every formation beneath the surface. Some older deeds or transactions limit the conveyance to specific depths or formations, meaning an owner might hold rights to the Bakken and Three Forks but not to a shallower or deeper zone that could see interest from a different kind of operator down the road. This is worth checking on any deed involved in a purchase or sale, since a depth limitation changes exactly what's being transferred.

We've seen this trip up otherwise straightforward transactions when a buyer assumed they were acquiring all depths and the seller's deed actually reserved a formation below the Bakken interval. Reading the deed's granting clause carefully avoids that kind of surprise.