Ownership-in-Place Theory Law and Legal Definition

Ownership in place theory is a principle of oil and gas law. According to this theory the nature of the interest of the landowner in oil and gas contained in his/her land is the same as his/her interest in solid minerals. Solid minerals are a part of the land in or beneath which they are located and as a consequence the owner of land is also the owner of the gas or oil in or beneath it. This theory is followed by the majority of the U.S. states like Texas, New Mexico, Kansas, Mississippi, and Michigan.

The following are examples of case law on the theory:

Mississippi and Texas follow the "ownership in place" theory in which an oil and gas lease is a conveyance of real property and the transferee obtains a determinable fee in minerals. [Sims v. Inexco Oil Co., 618 F. Supp. 183, 187 (S.D. Miss. 1985)]

Ownership-in-place is a theory of ownership of natural gas, which says "the owner of a tract of land holds the fee in oil and gas underlying the boundaries of his property even though the oil and gas are not the subject of actual possession until brought to the surface." [In re Hillsborough Holdings Corp., 207 B.R. 299, 303 (Bankr. M.D. Fla. 1997)]