An oil and gas royalty check is the payment a mineral or royalty owner receives for its share of the oil and gas sold from a lease or well, and the check stub (also called the remittance advice or check detail) is the statement that shows how the payment was calculated: for each well and month, the volume sold, the price, the taxes and deductions, the owner's decimal interest and the owner's net share.
When a well on or pooled with your minerals produces and the oil or gas is sold, the company responsible for paying owners, usually the operator and sometimes the purchaser, sends each owner its share of the sale proceeds. That payment is the royalty check. Most owners sign a division order first, which confirms the decimal interest the payor will use.
The dollar amount on the check tells you little by itself. The stub is where the story is: it breaks the payment down by property, product and production month, so you can see what was sold, at what price, what came off the top and how your share was figured. Because the stub is how owners check their payments, most producing states have statutes that list what it must contain.
Layouts differ by payor, but state statutes require largely the same core information. These are the columns you will see, in the terms the statutes use:
The table summarizes the check-stub statutes in six producing states, from each state's official code. Several allow the information to be provided another way, such as electronically or on a regular monthly statement, when the statute's conditions are met.
| State | Law | Notable requirements | If information is missing |
|---|---|---|---|
| Texas | Tex. Nat. Res. Code §§ 91.501–.507 | 12 items, including the county and state of the property, any other deductions or adjustments, and an address and telephone number for questions | Request by certified mail; payor answers by certified mail within 60 days for deductions, gas heating value or lease ID (§ 91.504), or 30 days for other questions (§ 91.505); civil action and attorney's fees if the 60-day deadline is missed (§ 91.507) |
| Oklahoma | Okla. Stat. tit. 52, § 570.12 | 10 items; decimals to at least the sixth place; a specific listing of other deductions is provided upon request | Information may be delivered electronically on mutual written consent |
| North Dakota | N.D. Admin. Code § 43-02-06-01 (under N.D.C.C. § 38-08-06.3) | 12 items, including 100% of volume sold, weighted average net price, and each deduction identified as transportation, processing, compression or administrative | Certified-mail questions must be answered by certified mail within 30 days; a separate statement of spacing unit and decimal is due within 120 days after the end of the month of the first sale from a well, or of a change in the well's spacing unit or in the owner's decimal interest (§ 43-02-06-01.1) |
| Wyoming | Wyo. Stat. § 30-5-305(b) | 11 items, labeled, including an itemized list of any other deductions or adjustments | Certified-mail requests answered within 30 days; a payor that fails to report is liable for $100 per month of incomplete reporting (§ 30-5-303(c)) |
| Louisiana | La. R.S. 31:212.31 | 9 items, including the owner's final realizable price per barrel or MCF | Information may be provided on a regular basis instead of on the stub |
| Pennsylvania | Oil and Gas Lease Act §§ 3.2 (conventional) and 3.3 (unconventional), 58 P.S. | Unconventional wells: the API number, volumes and price per well, and the aggregate amount of each category of deduction for each well | Request by certified mail; civil action and fees if the payor neither provides the information nor gives a reason within 60 days (§ 3.3(c)) |
The first check after a new well starts selling can take months while the payor confirms who owns what. State payment statutes set outer limits. The deadlines below apply unless the lease or another written agreement sets different terms, and payors may hold payments for reasons the statutes list, such as a title dispute or a missing owner.
| State | First payment due | Later payments due |
|---|---|---|
| Texas (Nat. Res. Code § 91.402) | 120 days after the end of the month of first sale | As the lease specifies; otherwise 60 days after the end of the month oil is sold, 90 days for gas |
| Oklahoma (52 O.S. § 570.10) | Six months after the date of first sale | By the last day of the second month after the month of sale (third month for certain gas royalty proceeds remitted to the operator) |
| New Mexico (NMSA § 70-10-3) | Six months after the first day of the month following first sale | 45 days after the end of the month in which the payor receives payment |
| Wyoming (W.S. § 30-5-301) | Six months after the first day of the month following first sale | 60 days after the end of the month in which production is sold |
| Pennsylvania, unconventional wells (Oil and Gas Lease Act § 3.3(e)) | 120 days from the date of first sale | Within 60 days after the end of the month the production is sold |
Payors may accumulate small amounts instead of cutting a check every month. Oklahoma allows annual payment of twelve months' proceeds totaling at least $10 but less than $100, and requires monthly payment of amounts over $25 if the owner asks. Wyoming allows annual payment when twelve months total $100 or less, but must pay within 60 days of a written request once the accumulation reaches $25. Pennsylvania's Oil and Gas Lease Act also allows proceeds to be accumulated and paid annually in some circumstances. If a check seems to have skipped a month, an accumulation rule is a common, harmless explanation.
Every line on the stub can be tested, but first see whether the price is a gross price (before deductions) or a net price (after them). With a gross price, volume times price should equal the gross value for the property; that times your decimal is your gross share; and your gross share minus your share of the taxes and deductions should equal your net for that line. With a net price, as North Dakota requires, volume times price is already net of the deductions folded into it, so subtract only the charges the stub lists separately, never the same deduction twice. Add the lines and you should reach the check total.
Two things commonly puzzle owners and are often normal. Your decimal may differ from what you expected because of the size of the unit; see how to read a division order. And on gas, post-production costs can make the price you are paid lower than a headline market price, depending on your lease.
A falling check is usually production decline or price; see why is my royalty check going down.
If a producing well is missing from your stub, your decimal changes without a new division order, or payments stop, the interest may be in suspense over a title or address issue. Stubs list a contact for owner questions, and several states' stub statutes provide a certified-mail request process with deadlines for the answer (Texas, Pennsylvania and North Dakota among them). Which steps fit a particular situation is a question for a qualified oil and gas attorney.
Keep every stub. Together they are the record of what you were paid and the starting point for any question to the payor. This page is general information, not legal, tax or accounting advice; consult a qualified attorney or CPA about your situation.
How to Calculate Oil and Gas Royalty Payments
Why Is My Royalty Check Going Down?
Oil & Gas Encyclopedia — all terms
Educational information only — not legal, tax, or investment advice. Consult a qualified attorney, CPA, or landman about your specific situation.
The payment a mineral or royalty owner receives for its share of oil and gas sold from a lease or well. It comes with a stub that shows, for each well and month, the volume sold, the price, taxes and deductions, the owner's decimal interest and the net amount paid.
When a well produces and the oil or gas is sold, the operator or purchaser collects the sale proceeds and pays each owner its share based on the decimal interest in its records, usually confirmed by a division order. Payments are typically monthly, a month or more after the production month.
The property or well, the production month, the volume and price, the gross value, severance and other taxes, other deductions, your decimal interest, and your gross and net share. Texas, Oklahoma, North Dakota, Wyoming, Louisiana and Pennsylvania each list the required items by statute.
The first payment on a new well commonly takes months. Absent a different lease term, Texas requires the first payment within 120 days after the end of the month of first sale, and Oklahoma, New Mexico and Wyoming allow up to about six months. Later payments are due within roughly 45 to 90 days after the month of sale, depending on the state and product.
First see whether the stub shows a gross price (before deductions) or a net price (after them; North Dakota requires a net price). With a gross price, volume times price should equal the gross value, gross value times your decimal your gross share, and your gross share minus your share of taxes and deductions your net. With a net price, the deductions folded into it are already taken out, so only the charges listed separately are subtracted.
Often because of post-production deductions on gas such as gathering, processing and transportation, depending on what your lease allows, and because the stub price may be a net or weighted average price. Several states require the stub to itemize deductions.
Small amounts may be accumulated and paid annually under state law, the interest may be in suspense over a title or address issue, or the well may not have sold production that month. Check with the payor's owner-relations contact on your stub.
Several state statutes provide a written request process. In Texas a payor must answer a certified-mail request about deductions within 60 days; in North Dakota and Wyoming certified-mail questions must be answered within 30 days; and the Texas and Pennsylvania statutes provide for a civil action if the payor does not respond in time. Which steps fit your situation is a question for a qualified oil and gas attorney.
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