Oil, Visualized — the Texas mineral estate, drawn

First — what's an "estate"?

In property law, an estate is just a set of ownership rights. The key thing about land is that it can hold more than one estate at once — and they can belong to different people. The two that matter here are the surface estate (the ground itself: soil, buildings, crops, roads, most water) and the mineral estate (the oil, gas, and other minerals below, plus the right to use the surface to reach them).

First — what's a "tract"?

A tract is a parcel of land defined by ownership, not by fences. If the same people own an area in the same shares, it's one tract. The instant the ownership differs from one part to the next, you have separate tracts — even if the ground looks identical and there's not a fence in sight. So tracts aren't fixed forever.

First — what's an "undivided" interest?

An undivided interest means your fraction applies to the whole tract, everywhere, all at once. Own an undivided 1/4 of 80 acres and you don't own any particular 20 acres — you own 1/4 of every single acre, side by side with your co-owners. There is no line on the ground separating "yours" from "theirs." To talk about how much that is, the industry converts it to net mineral acres: your fraction × the tract's acres.

First — what does "leasing" your minerals mean?

Owning minerals doesn't produce a single barrel — someone has to drill, and drilling costs millions. So the mineral owner signs a lease: a company (the lessee) gets the exclusive right to explore and produce, and the owner (the lessor) gets paid two ways — a bonus up front just for signing, and a royalty: a fraction of production, free of drilling costs, for as long as the lease lasts.

First — what's a unit?

Minerals under a field are almost never owned by one person. They're a patchwork of separate tracts, each with its own owners and fractions. On its own, most any single tract is the wrong size or shape to drill — and an operator can't just drill wherever they like.