Surface Estate Owners and the Power to Negotiate

Surface Estate Owners and the Power to Negotiate

In Texas mineral estate owners have the right to what's under the ground while surface estate owners have rights to whats on the ground. Local Big 2's Camila Bernal takes a closer look at what happens when you only own the surface
The ranch is what Lee Ann Ballew knows best. She grew up riding horses and working with her father on the family ranch in Andrews County.

“You get it in your blood,” Ballew said. “You want to do it.”

The ranch is also what Ballew hopes to leave behind for her grandchildren and the generations to come.

But as a sole surface owner, the future is uncertain.

“Eventually you kind of wonder, you start wondering, well how much grass is going to be left?” she said, “Are we going to be able to make money off the cattle?”

When Ballew’s father died in 2004, she inherited the ranch, which included seven sections of land plus three sections of Conservation Reserve Program land, rented to the government for conservation. She owns about 100 cattle, but it’s the grass and the space that continues to diminish.

The problem is attributed to the drought and to the more than 50 oil and gas operations in her ranch. At each drilling site, energy companies take up a portion of her grass and replace it with caliche.

“I can just tell you that south of the house in a half section plot there has been 15 wells, two major tank batteries,” Ballew said. “I don’t know how many roads. I guess 15 roads nearly because every one of them has to have one to get to the main road.”

Ballew has had to deal with over a dozen different oil and gas companies, some more understanding than others.

The family has also gotten accustomed to the increase in truck traffic, the bright lights during night operations and the noise coming from the workers.

“It's not a great place to be if you're somebody who owns just the surface,” said Tiffany Dowell, an assistant professor and extension specialist specializing in agricultural law with Texas A&M Agrilife Extension.

In Texas, mineral estate owners have the rights to what's under the ground, while surface estate owners have rights to what’s on the ground. Negotiations between the mineral estate owners and surface estate owners can be complicated and lengthy.

“I do not believe that all the oil and gas companies are evil at all but I certainly think that people need to know how to protect their rights to ensure that they are not taken advantage of,” Dowell said.

Three years after inheriting the ranch, the number of oil companies coming to drill in Ballew’s ranch increased. She began comparing the contracts with previous contracts signed by her father, but eventually realized that she was getting less money than what others around her were getting.

Dowell began researching online and asking more question. Then she turned to negotiating the little that she could with just being the surface owner.

“If you're going to drill on me you have to buy your caliche from me so I get paid for the damages but then they use my caliche to make their pads and roads,” Ballew said.

Today, it’s the caliche business that helps pay for her cattle.

“It's extremely important that people understand exactly how the law works and exactly what their rights are,” Dowell said.

The oil and gas industry has undeniably brought money. In addition to the caliche business the family recently started buying water and selling it to the oil and gas companies to use for hydraulic fracturing. Owing the land also entitles you to damage checks from the energy companies drilling in her land.

“The damage checks are good,” Ballew said. “They help me pay for the new fencing, they help pay you know, buy and fees when it's a drought.”

But despite a good deal, Ballew continues to experience some of the downsides of the business. Drilling sites continue to get closer to her house, rigs are lit up at night disturbing her sleep and she has seen an increase in traffic.

“One of the hard things as a land owner is you never know who is coming in,” Ballew said. “Who is with that company? What are they doing?”

To help in the relationship between oil companies and land owner, Dowell constantly gives presentations that remind landowners of their rights and their ability to negotiate.

“There are some protections that a landowner can get that may be more important than the money,” Dowell said.

And Ballew said the cattle and her legacy is more important that the money.

“We just want enough that we can retire or work the ranch and it supply us with what we need to live,” Ballew said.
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