This set of frequently asked questions (FAQ) is provided as an informal guide to members of the public seeking information or legal services the Railroad Commission CANNOT provide. Since the Texas Legislature has given the Railroad Commission limited authority to regulate the oil and gas industry in Texas, our staff cannot advise you in all oil and gas matters. Areas over which the Railroad Commission has no authority include lease and royalty matters (including leasing, payment of royalties and the right to receive royalties), the financing of or investment in oil and gas activities, and bankruptcy.
The purpose of this page is to increase awareness of royalty payment requirements. It is not intended to serve as legal advice. Consult with your own attorney about questions concerning royalty payments.
Also, the lease or another contract may provide different requirements for payment than this statute. Working interest owners should check their lease terms so that they can be sure payments are made as required.
How can I find information about an existing lease or royalty agreement?
If you have questions about an existing lease or royalty agreement, you may find the information you seek in the courthouse of the county where the land is located. Usually a call to the courthouse can help you determine if any of the documents on file there are what you want.
The Commission maintains records regarding the reported production and disposition for all oil and gas produced from wells in the State. This information may be helpful in determining your interests. Additionally, the Commission also maintains records regarding the permitting of wells. If you have internet access you can obtain all reported production information from January 1993 to present and any online permitting records at the Commission's website www.rrc.texas.gov. There is no charge for access to these records. If you require production records from earlier than January 1993, or if you require historical permitting records filed for a well that are not available on-line, you will need to contact the Commission's Central Records department at (512) 463-6882. For a small charge you may obtain copies of any records maintained in the Central records department.
To obtain production information on-line, you will need the RRC Identification Number for the well, a five digit number for oil wells or a six digit number for gas wells. This identification number is required to be posted at the entrance to the property where the well is located. This identification information may not be the same identification number used on any payment stub or other documentation received by a royalty interest owner. If you do not have the RRC well identification information, you may require further assistance to identify the wells to access the information available through the Commission's on-line database system. To access production information, start at the home page, go to the Resource Center Online Research Queries and click on production data query to get access to the Commission's on-line database for these records.
To obtain drilling permit information on-line, start at the home page, go to the Resource Center Online Research Queries and click on drilling permit query to get access to the Commission's on-line database for these records. By entering the drilling permit number, you can review the documents filed with the drilling permit application. You can search the Commission's on-line drilling permit database if you do not know the drilling permit number. Drilling permit records include plats and other documents designating the acreage in a pooled unit.
Who oversees payment of oil production taxes?
L.B.J. State Office Building
111 E. 17th Street
Austin, Texas 78701
(512) 463-4000 or (800) 252-1384
Where can I find statutes outlining the rights of royalty owners?
State Bar of Texas
P.O. Box 12487
Austin, Texas 78711
The Railroad Commission cannot advise you whether you should enter into a lease or any other agreement, or whether an operator is in compliance with the terms of a lease. Since these are private contractual matters, you may want to consider contacting an experienced oil and gas attorney.
Who should I contact about unclaimed royalties or other oil and gas proceeds?
Unclaimed Property Division
P.O. Box 12019
Austin, Texas 78711-2019
(512) 463-3040 or (800) 531-5441
(800) 321-2274 (out-of-state)
Who do I contact about investment offers?
Securities and Exchange Commission
801 Cherry St., 19th Floor
Fort Worth, Texas 76102
State Securities Board
P.O. Box 13167
Austin, Texas 78711
The State Securities Board is located at 200 East 10th St., 5th floor. The State Securities Board has an enforcement section that may be able to address your complaints regarding particular investment offers.
Secretary of State
P.O. Box 12697
Austin, Texas 78711-2697
The Secretary of State is located in the James Rudder Building at 1019 Brazos Street.
I am a working interest owner in a well or property. What are my responsibilities for royalty payments?
As a working interest owner in a well or property, you have the responsibility to pay or cause to be paid any royalties due under the lease agreement from which you derived your working interest. This is true even if you are not the operator of the well or property. You can cause the royalty to be paid by entering into an agreement with the operator or purchaser of production to pay the royalties on your behalf. The purpose of this brochure is to provide you with basic royalty payment information to help you pay royalties timely. Remember it is through the cooperation of the mineral owner and the working interest owner that oil and gas is produced.
The requirements covered in this brochure are outlined in the Texas Natural Resources Code Section 91 Subchapters J and L.
These requirements include:
- When to pay royalties, when royalties can be suspended, and what interest rate to pay when interest is due
- What should be reported with a payment
- The statutory components of a division order
- What kind of notice to provide royalty owners when you buy a working interest or when the payor changes
- What information a royalty interest owner can request
When are royalty payments made?
- 120 Days after end of month of first sale
- 60 days after end of calendar month in which oil production sold
- 90 days after end of calendar month in which gas production sold
- If payments do not reach $100 within 12 months and are greater than $10, the aggregated amount must be paid
- Amounts that do not aggregate to $10 must be paid upon the sale or plugging of the property or at the owner's request
- If an owner requests payment more frequently, only aggregate to $25
What must be reported with a royalty payment?
Section 91.502 (amended effective 9/1/2002)
- Property Identification (Name, Number, or both; and County and State)
- Sales month and year
- Volume sold
- Price per barrel or Mcf
- Severance or other taxes deducted
- Windfall profit taxes (repealed 1989)
- Other deductions or adjustments
- Net value
- Owner decimal interest
- Owner gross value
- Owner net value
- Address and phone number where additional information can be obtained
Royalty owner requests
If a royalty owner notifies you in writing of failure to make timely payment, you must either make payment or respond in writing within 30 days of receipt of the notice.
Section 91.504 (amended effective 9/1/2002)
Requests sent by certified mail for information regarding itemized deductions, adjustments, the heating value of gas, or the Railroad Commission of Texas identification number for the lease, property, or well must be responded to within 60 days of receipt of the request.
Section 91.505 (amended effective 9/1/2002)
Additional requests sent by certified mail for information not covered by Section 91.504 must be responded to within 30 days of receipt of request.
Change of Payor
If there is a change of payor, the new payor must notify the payee in writing of the change at the payee's most recent known address. The notice must include property name and number, effective date (month and year), and payor's address and phone number.
A division order, check detail, or other written communication that includes all of the above information will satisfy this requirement.
Buying a Working Interest
Payments can be suspended without interest (provided the lease does not provide otherwise) if:
- A dispute concerning title exists that would affect distribution of payments
- A reasonable doubt exists that the payee has sold or authorized the sale of its share of the oil or gas to the purchaser
- A reasonable doubt exists that the payee has clear title to the interest in the proceeds of production
- A title opinion requirement placing the title, identity, or whereabouts of the payee at issue remains unsatisfied after a reasonable request for curative has been made.
- Payments are aggregated as provided by statute
When interest is due
Late payment interest is due at a rate of 2 percentage points above rate charged on loans to depository institutions by New York Federal Reserve Bank when:
- Payment is late and the title is clear
- Payment is late, a division order is offered that does not comply with statutes, and the division order is not signed
Late payment Interest is due at a rate of 4 percentage points above the rate charged on loans to depository institutions by the New York Federal Reserve Bank when:
- Payment is late and notice that you are the new payor has not been provided
Annual Notice to Royalty Owners
Section 91.504(e) (effective 9/1/2002)
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:Section 91.504, Texas Natural Resources Code, gives an owner of a royalty interest in oil or gas produced in Texas the right to request from a payor information about itemized deductions, the heating value of gas, and the Railroad Commission of Texas identification number for the lease, property, or well that may not have been provided to the royalty interest owner. The request must be in writing and must be made by certified mail. A payor must respond to a request regarding itemized deductions, the heating value of gas, and the Railroad Commission of Texas identification number by certified mail not later than the 60th day after the date the request is received. An owner of a royalty interest in oil or gas may obtain information regarding production that has been reported to the Railroad Commission of Texas by contacting the oil and gas division of the commission or accessing the commission's website and providing the identification number of the lease and the county in which the lease is located.
As a condition for the payment of proceeds, a payor may require a signed division order from the payee containing certain provisions. These provisions include:
- Effective date of division order
- Property description and type of production
- Payee's fractional and/or decimal interest
- Payee's type of interest (Royalty, Override, etc.)
- Certification of title to the share of production being claimed
- Unless otherwise agreed to by the parties, agreement to notify payor at least one month in advance of effective date of any change of interest
- Agreement to indemnify and reimburse the payor for payments resulting from failure of title
- Authorization to suspend payment to payee for title dispute or adverse claim
- Name, address, and taxpayer identification number of payee
- Provisions for valuation and timing of settlements of oil and gas production to the payee
- Notification to the payee that other statutory rights may be available to a payee with regard to payments
Other resources for royalty information
Listed below are other resources for royalty information:
American Royalty Council
National Association of Royalty Owners - TX (NARO-TX)
Texas Oil and Gas Association (TXOGA)
Council of Petroleum Accounting Societies (COPAS)
National Association of Royalty Owners (NARO)
Texas Independent Producers and Royalty Owners Association (TIPRO)
Permian Basin Petroleum Association (PBPA)
Panhandle Producers and Royalty Owners Association (PPROA)
National Association of Division Order Analysts (NADOA)
Texas Alliance of Energy Producers
Texas Land and Mineral Owners Association (TLMA)
Oil & Gas Mineral Services
Visit the Bankruptcy Court webpage at http://www.txwb.uscourts.gov/
You can find the address and phone number for the district by clicking on the clerk offices tab.