Texas Royalty Payment Law: Deadlines, Interest and Owner Remedies

Texas royalty payment rules at a glance

Main statute: Texas Natural Resources Code, Chapter 91, Subchapter J (Payment for Proceeds of Sale) and Subchapter L (Royalty Reporting Standards).

First payment deadline

Proceeds from the sale of oil or gas from a Texas well must be paid to each payee no later than 120 days after the end of the month of first sale of production from the well. Subchapter J does not apply to royalties payable to the University of Texas System board of regents under a Permanent University Fund lease or to the General Land Office under Chapter 52, Subchapter D (§ 91.405).

Subchapter J (payment deadlines, interest and the notice-and-suit rules) does not apply to royalties payable to the University of Texas System board of regents under a lease of Permanent University Fund land, or to the General Land Office under Chapter 52, Subchapter D. (Tex. Nat. Res. Code § 91.405)

Statute text “This subchapter does not apply to any royalties that are payable to: (1) the board of regents of The University of Texas System under a lease of land dedicated to the permanent university fund; or (2) the General Land Office as provided by Subchapter D, Chapter 52, of this code.”

The payor must pay each payee on or before 120 days after the end of the month of first sale of production from the well. (Tex. Nat. Res. Code § 91.402(a))

Statute text “The proceeds derived from the sale of oil or gas production from an oil or gas well located in this state must be paid to each payee by payor on or before 120 days after the end of the month of first sale of production from the well.”

Later payments

After the first payment, payments follow the frequency set in the lease or other written agreement. If the agreement is silent, oil proceeds are due within 60 days and gas proceeds within 90 days after the end of the calendar month in which the production is sold.

Later payments must be made on a timely basis according to the payment frequency in the lease or other written agreement between payee and payor. (Tex. Nat. Res. Code § 91.402(a))

Statute text “After that time, payments must be made to each payee on a timely basis according to the frequency of payment specified in a lease or other written agreement between payee and payor.”

If the agreement does not specify timing, oil proceeds are due no later than 60 days after the end of the calendar month in which the oil is sold. (Tex. Nat. Res. Code § 91.402(a)(1))

Statute text “If the lease or other agreement does not specify the time for payment, subsequent proceeds must be paid no later than: (1) 60 days after the end of the calendar month in which subsequent oil production is sold; or”

If the agreement does not specify timing, gas proceeds are due no later than 90 days after the end of the calendar month in which the gas is sold. (Tex. Nat. Res. Code § 91.402(a)(2))

Statute text “(2) 90 days after the end of the calendar month in which subsequent gas production is sold.”

Minimum payment and aggregation

A payor may pay annually (aggregating up to 12 months of proceeds) when it owes the payee $100 or less in total from all wells, and may hold accumulated proceeds under $10 until production or its payment responsibility ceases. On written request the payor must pay annually if it owes less than $10, and monthly if it owes more than $25 but less than $100.

Payment may be made annually for up to 12 months of accumulated proceeds if the payor owes the payee $100 or less in total from all wells. (Tex. Nat. Res. Code § 91.402(f))

Statute text “Payment may be remitted to a payee annually for the aggregate of up to 12 months' accumulation of proceeds if the payor owes the payee a total amount of $100 or less for production from all oil or gas wells for which the payor must pay the payee.”

Accumulated proceeds under $10 may be held until production ceases or the payor's payment responsibility ends. (Tex. Nat. Res. Code § 91.402(f))

Statute text “However, the payor may hold accumulated proceeds of less than $10 until production ceases or the payor's responsibility for making payment for production ceases, whichever occurs first.”

On the payee's written request, the payor must pay annually if it owes less than $10, and monthly if it owes more than $25 but less than $100. (Tex. Nat. Res. Code § 91.402(f))

Statute text “On the written request of the payee, the payor shall remit payment of accumulated proceeds to the payee annually if the payor owes the payee less than $10. On the written request of the payee, the payor shall remit payment of proceeds to the payee monthly if the payor owes the payee more than $25 but less than $100.”

Interest on late payments

If payment is not made within the § 91.402 time limits, the payor owes interest from the end of those limits at two percentage points above the rate the New York Federal Reserve Bank charges on loans to depository institutions, unless a written agreement sets a different rate; § 91.403(b) makes this interest rule inapplicable where payment is withheld for the § 91.402 reasons (see suspense). The statute does not say whether interest is simple or compound. A new payor that fails to give the required change-of-payor notice owes interest at two percent more than that rate. Interest stops when the proceeds are delivered to the comptroller as unclaimed property.

Interest runs from the expiration of the § 91.402 time limits at two percentage points above the New York Federal Reserve Bank's rate on loans to depository institutions, unless a written agreement specifies a different rate. (Tex. Nat. Res. Code § 91.403(a))

Statute text “If payment has not been made for any reason in the time limits specified in Section 91.402 of this code, the payor must pay interest to a payee beginning at the expiration of those time limits at two percentage points above the percentage rate charged on loans to depository institutions by the New York Federal Reserve Bank, unless a different rate of interest is specified in a written agreement between payor and payee.”

A payor that owes interest under § 91.403 and fails to give the required notice of a change in payor is liable for interest at a rate two percent more than the § 91.403 rate. (Tex. Nat. Res. Code § 91.407(d))

Statute text “A payor that is obligated to pay interest to a payee under Section 91.403 and that does not give the payee a notice required by this section is liable to the payee for interest under that section at a rate that is two percent more than the rate provided by that section.”

The interest obligation ends when the proceeds and accumulated interest are delivered to the comptroller under the unclaimed property law. (Tex. Nat. Res. Code § 91.403(c))

Statute text “The payor's obligation to pay interest and the payee's right to receive interest under Subsection (a) of this section terminate on delivery of the proceeds and accumulated interest to the comptroller as provided by Title 6, Property Code.”

Suspense and withheld payments

A payor may withhold payment without interest when there is a title dispute affecting distribution, reasonable doubt that the payee authorized the sale or has clear title, an unsatisfied title-opinion requirement about the payee's title, identity or whereabouts after a reasonable curative request, or a child-support lien or withholding order. A payor may also withhold without interest if the owner refuses to sign a division order containing only the statutory provisions, but not because the owner refuses a division order with extra provisions. Late-payment interest does not apply to payments withheld for these statutory reasons.

Payments may be withheld without interest for a title dispute, reasonable doubt about the payee's authorization of the sale or clear title, or an unsatisfied title-opinion requirement about the payee's title, identity or whereabouts. (Tex. Nat. Res. Code § 91.402(b)(1))

Statute text “Payments may be withheld without interest beyond the time limits set out in Subsection (a) if: (1) there is: (A) a dispute concerning title that would affect distribution of payments; (B) a reasonable doubt that the payee: (i) has sold or authorized the sale of its share of the oil or gas to the purchaser of such production; or (ii) has clear title to the interest in the proceeds of production; or (C) a requirement in a title opinion that places in issue the title, identity, or whereabouts of the payee and that has not been satisfied by the payee after a reasonable request for curative information has been made by the payor; or”

Payments may also be withheld without interest when subject to a child support lien or a withholding order under the Family Code. (Tex. Nat. Res. Code § 91.402(b)(2))

Statute text “(2) the payments are subject to a child support lien under Chapter 157, Family Code, or an order or writ of withholding issued under Chapter 158, Family Code.”

A payee has no common law breach-of-contract claim for payments withheld under § 91.402(b) unless, for a title dispute, the contract requiring payment specifies otherwise. (Tex. Nat. Res. Code § 91.402(b-1))

Statute text “A payee does not have a common law cause of action for breach of contract against a payor for withholding payments under Subsection (b) unless, for a dispute concerning the title, the contract requiring payment specifies otherwise.”

A payor may not withhold payment solely because an owner refuses a division order with extra provisions, but may withhold without interest if the owner refuses one containing only the statutory provisions. (Tex. Nat. Res. Code § 91.402(e))

Statute text “If an owner in a producing property will not sign a division order because it contains provisions in addition to those provisions provided for in this section, payor shall not withhold payment solely because of such refusal. If an owner in a producing property refuses to sign a division order which includes only the provisions specified in Subsection (c) of this section, payor may withhold payment without interest until such division order is signed.”

The late-payment interest rule does not apply where payments are withheld or suspended for the conditions listed in § 91.402. (Tex. Nat. Res. Code § 91.403(b))

Statute text “Subsection (a) of this section does not apply where payments are withheld or suspended by a payor beyond the time limits specified in Section 91.402 of this code because of the conditions enumerated in Section 91.402 of this code.”

Division orders

As a condition of payment a payor is entitled to a signed division order containing only the provisions listed in § 91.402(c)(1) (effective date, property description, claimed interest and title certification, authority to suspend for title disputes, payee name/address/tax ID, valuation and settlement timing, and notice of other statutory rights). A division order does not amend the lease or operating agreement, cannot change the lessee's lease obligations including the duty to market, and any provision contradicting the lease is invalid to that extent. Division orders bind only as far as acted on and are terminable by either party on 30 days' written notice.

A payor is entitled, as a condition of payment, to a signed division order containing only the provisions the statute lists. (Tex. Nat. Res. Code § 91.402(c)(1))

Statute text “As a condition for the payment of proceeds from the sale of oil and gas production to payee, a payor shall be entitled to receive a signed division order from payee containing only the following provisions:”

A division order does not amend any lease or operating agreement or any contract for the purchase of oil or gas. (Tex. Nat. Res. Code § 91.402(c)(2))

Statute text “Such a division order does not amend any lease or operating agreement between the interest owner and the lessee or operator or any other contracts for the purchase of oil or gas.”

Division orders bind only for the time and extent acted on, and either party may terminate on 30 days' written notice. (Tex. Nat. Res. Code § 91.402(g))

Statute text “Division orders are binding for the time and to the extent that they have been acted on and made the basis of settlements and payments, and, from the time that notice is given that settlements will not be made on the basis provided in them, they cease to be binding. Division orders are terminable by either party on 30 days written notice.”

Signing a division order does not change or relieve the lessee's lease obligations, including the duty to market; a division-order provision contradicting the lease is invalid to that extent. (Tex. Nat. Res. Code § 91.402(h))

Statute text “The execution of a division order between a royalty owner and lessee or between a royalty owner and a party other than lessee shall not change or relieve the lessee's specific, expressed or implied obligations under an oil and gas lease, including any obligation to market production as a reasonably prudent lessee. Any provision of a division order between payee and its lessee which is in contradiction with any provision of an oil and gas lease is invalid to the extent of the contradiction.”

A division order may be used to clarify royalty settlement terms; for production sold in the field or at a nearby gathering point, lease terms such as "market value" are defined as the amount realized at the mouth of the well in an arm's-length transaction. (Tex. Nat. Res. Code § 91.402(i))

Statute text “A division order may be used to clarify royalty settlement terms in the oil and gas lease. With respect to oil and/or gas sold in the field where produced or at a gathering point in the immediate vicinity, the terms "market value," "market price," "prevailing price in the field," or other such language, when used as a basis of valuation in the oil and gas lease, shall be defined as the amount realized at the mouth of the well by the seller of such production in an arm's-length transaction.”

Owner remedies, notice and attorney fees

Before suing for nonpayment, the payee must give the payor written notice by mail; the payor then has 30 days to pay or state in writing a reasonable cause for nonpayment. The payee may sue in the county where the well is located. A judgment for the plaintiff must include reasonable attorney's fees and, if actual damages are under $200, enough additional damages to total $200. For check-stub information, an owner may sue after a certified-mail request goes unanswered for 60 days, and the prevailing party recovers court costs and attorney's fees.

Written notice by mail to the payor is a prerequisite to suing for late proceeds or interest. (Tex. Nat. Res. Code § 91.404(a))

Statute text “If a payee seeks relief for the failure of a payor to make timely payment of proceeds from the sale of oil or gas or an interest in oil or gas as required under Section 91.402 or 91.403 of this code, the payee must give the payor written notice by mail of that failure as a prerequisite to beginning judicial action against the payor for nonpayment.”

The payor has 30 days after receiving the notice to pay or to state in writing a reasonable cause for nonpayment. (Tex. Nat. Res. Code § 91.404(b))

Statute text “The payor has 30 days after receipt of the required notice from the payee in which to pay the proceeds due, or to respond by stating in writing a reasonable cause for nonpayment.”

The payee may sue in any court of competent jurisdiction in the county where the well is located. (Tex. Nat. Res. Code § 91.404(c))

Statute text “A payee has a cause of action for nonpayment of oil or gas proceeds or interest on those proceeds as required in Section 91.402 or 91.403 of this code in any court of competent jurisdiction in the county in which the oil or gas well is located.”

A final judgment for the plaintiff must award reasonable attorney's fees and bring total damages up to at least $200. (Tex. Nat. Res. Code § 91.406)

Statute text “If a suit is filed to collect proceeds and interest under this subchapter, the court shall include in any final judgment in favor of the plaintiff an award of: (1) reasonable attorney's fees; and (2) if the actual damages to the plaintiff are less than $200, an additional amount so that the total amount of damages equals $200.”

If a payor does not provide requested statement information within 60 days of a certified-mail request, the owner may bring a civil action; the prevailing party recovers reasonable court costs and attorney's fees. Either party may request mediation. (Tex. Nat. Res. Code § 91.507(c)-(d))

Statute text “If a payor fails to provide the requested information within the period specified by Subsection (b), either party may request mediation. (d) If the royalty interest owner makes a written request for information under Section 91.504 or this section and the payor does not provide the information within the 60-day period, the royalty interest owner may bring a civil action against the payor to enforce the provisions of Section 91.504 or this section, as applicable. The prevailing party is entitled to recover reasonable court costs and attorney's fees.”

Check-stub disclosures

Each check stub, attachment or remittance advice to a royalty interest owner must show 12 items, including the lease/property/well name and ID with county and state, the sales month and year, volumes, price, production taxes, other deductions, net value, the owner's decimal interest, the owner's gross and net share, and a contact address and phone number. Owners may request by certified mail explanations of deductions, gas heating value, and lease identification, which must be answered by certified mail within 60 days; other questions must be answered within 30 days. Payors must send an annual notice of these rights.

When royalty is paid under a division order, lease or other agreement, the § 91.502 information must be on the check stub, an attachment, or a remittance advice accompanying the payment. (Tex. Nat. Res. Code § 91.501)

Statute text “If payment is made to a royalty interest owner from the proceeds derived from the sale of oil or gas production pursuant to a division order, lease, servitude, or other agreement, the payor shall include the information required by Section 91.502 on the check stub, an attachment to the payment form, or another remittance advice that accompanies the payment.”

Required items include the lease/property/well name and ID number with county and state, the sales month and year, total volumes sold, and price per barrel or MCF. (Tex. Nat. Res. Code § 91.502(1)-(4))

Statute text “(1) the lease, property, or well name, any lease, property, or well identification number used to identify the lease, property, or well, and a county and state in which the lease, property, or well is located; (2) the month and year during which the sales occurred for which payment is being made; (3) the total number of barrels of oil or the total amount of gas sold; (4) the price per barrel or per MCF of oil or gas sold;”

Required items also include severance and production taxes, windfall profit tax, other deductions, net value, the owner's decimal interest, the owner's gross and net shares, and an address and phone number for questions. (Tex. Nat. Res. Code § 91.502(5)-(12))

Statute text “(5) the total amount of state severance and other production taxes paid; (6) the windfall profit tax paid on the owner's interest; (7) any other deductions or adjustments; (8) the net value of total sales after deductions; (9) the owner's interest in sales from the lease, property, or well expressed as a decimal; (10) the owner's share of the total value of sales before any tax deductions; (11) the owner's share of the sales value less deductions; and (12) an address and telephone number at which additional information regarding the payment may be obtained and questions may be answered.”

If deductions are not explained, the payor must explain them by certified mail within 60 days after receiving a certified-mail request from the royalty owner. (Tex. Nat. Res. Code § 91.504(a))

Statute text “If the payor does not explain on the check stub, attachment to the payment form, or other remittance advice, or by a separate mailing, deductions from or adjustments to payments, the payor must provide an explanation by certified mail not later than the 60th day after the date the payor receives a request from the royalty interest owner.”

Other questions about a payment, sent by certified mail, must be answered by certified mail within 30 days. (Tex. Nat. Res. Code § 91.505)

Statute text “If a royalty interest owner requests information or answers to questions concerning a payment made pursuant to this subchapter, other than information requested under Section 91.504, and the request is made by certified mail, the payor must respond to the request by certified mail not later than 30 days after the request is received.”

If paid by mailed paper check, the payor may provide the information other than with the payment only with the owner's consent (or a previous payor's obtained consent). (Tex. Nat. Res. Code § 91.506(b))

Statute text “If payment is made to the royalty interest owner by a paper check delivered by mail or by means of a private delivery service, the payor may not provide the information required by Section 91.502 in a manner other than by including the information on the check stub, an attachment to the payment form, or another remittance advice that accompanies the payment unless the payor obtains, or a previous payor has obtained, the consent of the royalty interest owner to provide the information in some other manner.”

At least once every 12 months, the payor must give each royalty owner it pays a statutory statement describing the § 91.504 information rights. (Tex. Nat. Res. Code § 91.504(e))

Statute text “At least once every 12 months, a payor shall provide the following statement to each royalty interest owner to whom the payor makes a payment:”

Unclaimed royalties (escheat)

Under Texas Property Code ch. 75, mineral proceeds (including royalties, overriding royalties, bonuses, delay rentals and shut-in royalties) that remain unclaimed for longer than three years after they became payable or distributable, together with the owner's underlying right to receive them, are presumed abandoned. Holders report and deliver such property to the Texas Comptroller by July 1 for property held on March 1.

"Mineral proceeds" include royalties, overriding royalties, net revenue interests, production payments, bonuses, delay rentals, shut-in royalties and minimum royalties. (Tex. Prop. Code § 75.001(a)(2))

Statute text “(A) all obligations to pay resulting from the production and sale of minerals, including net revenue interests, royalties, overriding royalties, production payments, and joint operating agreements; and (B) all obligations for the acquisition and retention of a mineral lease, including bonuses, delay rentals, shut-in royalties, and minimum royalties.”

Mineral proceeds unclaimed for longer than three years after becoming payable or distributable, and the owner's underlying right to receive them, are presumed abandoned. (Tex. Prop. Code § 75.101(a))

Statute text “All mineral proceeds that are held or owing by the holder and that have remained unclaimed by the owner for longer than three years after they became payable or distributable and the owner's underlying right to receive those mineral proceeds are presumed abandoned.”

Once the underlying right is presumed abandoned, proceeds then held and proceeds accruing afterward from that right are also presumed abandoned. (Tex. Prop. Code § 75.101(b))

Statute text “At the time any owner's underlying right to receive mineral proceeds is presumed abandoned under this section, any mineral proceeds then held for or owing to the owner as a result of the underlying right and any mineral proceeds accruing after that time as a result of the underlying right and not previously presumed abandoned are presumed abandoned.”

Holders that hold reportable property on March 1 must deliver it to the comptroller, with the report, by the following July 1. (Tex. Prop. Code § 74.301(a))

Statute text “Except as provided by Subsection (c), each holder who on March 1 holds property to which this chapter applies shall deliver the property to the comptroller on or before the following July 1 accompanied by the report required to be filed under Section 74.101.”

Official unclaimed property search: Texas Comptroller of Public Accounts — Unclaimed Property (ClaimItTexas).

Sources

Last reviewed November 2, 2026.

• Texas Natural Resources Code, Chapter 91 (Subchapter J, Payment for Proceeds of Sale; Subchapter L, Royalty Reporting Standards) — Texas Legislative Council, fetched November 2, 2026
• Texas Property Code, Chapter 75 (Texas Minerals) — unclaimed mineral proceeds — Texas Legislative Council, fetched November 2, 2026
• Texas Property Code, Chapter 74 (Report, Delivery, and Claims Process) — unclaimed property — Texas Legislative Council, fetched November 2, 2026
• Texas Comptroller unclaimed property site (ClaimItTexas); https://comptroller.texas.gov/programs/claim-it/ redirects here — Texas Comptroller of Public Accounts, fetched November 2, 2026

Related guides

• Royalty payment law by state (comparison of the covered states)
• Texas mineral rights
• Suspended royalties: why you are not getting paid
• Division orders explained
• How to read a royalty statement
• Unclaimed mineral royalties

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