What is the Difference Between Mineral Interest and Royalty Interest?

The main difference between mineral interest and royalty interest lies in the rights and benefits associated with each. Here are the key distinctions:

• Mineral Interest: A mineral interest is a real property interest obtained by severing the minerals from the surface. It grants the owner the right to explore, exploit, and produce minerals found beneath the surface. A mineral interest owner also has the right to receive lease bonuses, delay rental payments, shut-in payments, and royalties. They can enter into a lease and drill or develop the minerals underlying the surface.
• Royalty Interest: A royalty interest is a property interest that entitles the owner to receive a portion of the production revenue generated from the minerals. However, unlike a mineral interest owner, a royalty interest owner does not possess executive rights, nor do they have the right to receive lease bonuses, delay rental payments, or shut-in payments. Their sole right is to receive royalties once production is established.

In summary, a mineral interest owner has the right to explore, develop, and produce minerals, as well as enter into leases and receive various payments, while a royalty interest owner is entitled to a share of the production revenue without the executive rights and other benefits associated with mineral interest ownership.

Comparative Table: Mineral Interest vs Royalty Interest

Here is a table comparing the differences between mineral interest and royalty interest:

In summary, a mineral interest owner has more rights and responsibilities, including the ability to lease, explore, and produce minerals, while a royalty interest owner has a more passive role, receiving a share of the production revenue without the rights to lease or explore for minerals.