Fee interest

A fee interest is the legal possession of both the surface and mineral rights for a property. The owner of a fee interest may choose to sell the surface rights, but retain the mineral rights – or vice versa. An oil and gas firm does not usually acquire a fee interest. Instead, it seeks leasing arrangements with the owner of the mineral rights associated with a property that allow it to drill wells and produce oil and gas. These arrangements typically require the company to bear the costs of drilling and production, while the owner of the fee interest receives either a fixed payment or a share of the resulting production.

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Oil and Gas Accounting