Division orders and royalty check stubs in Texas: what the statute says
A royalty owner is paid from the decimal on the check stub, and the home page worksheet turns that decimal into net royalty acres. This page sets out what Texas law says about that paper, and shows how to test a decimal against a deed with a few lines of arithmetic.
This is general information, not legal advice. It covers Texas oil and gas wells only. Other states have their own laws. It reports what the statute says and doesn't tell you whether to sign anything.
Subchapters J and L of Chapter 91 of the Texas Natural Resources Code set the rules for paying oil and gas royalties. They list what a division order may contain (§ 91.402(c)), what every check stub must show (§ 91.502), and the deadlines for payment and for answers to an owner's written questions. The decimal on the stub is your share of the well or unit, and you can test it by hand against your deed and lease. A decimal that doesn't match your arithmetic is a question to ask the payor, not proof of a mistake. Whether a particular division order fits the statute is a question for an oil and gas attorney.
The Railroad Commission of Texas (RRC) adds that the lease or another contract may set different payment requirements than the statute does (RRC royalties FAQ). Royalties payable to the board of regents of The University of Texas System under a lease of permanent university fund land, or to the General Land Office under Subchapter D of Chapter 52, are outside Subchapter J (§ 91.405). Subchapter J's payment-timing and division-order rules do not apply to them.
1Who is who
Four words carry most of the statute (Natural Resources Code § 91.401).
- Payee. A person legally entitled to payment from the proceeds of oil or gas sold from a well in Texas. As a royalty owner, that is you.
- Payor. The party who undertakes to distribute those proceeds to the payee. It can be the purchaser of the production, the operator of the well, or the lessee under the lease on which royalty is due.
- Division order. An agreement signed by the payee that directs and authorizes the payor to pay in the way it sets out. The statute counts a transfer order as a division order.
- Transfer order. An agreement signed by a payee and the person taking the interest, the new payee, that directs the payor under the division order to pay another person a share of the oil or gas.
2When the money is due
| Payment | Due |
|---|---|
| First payment from a well | On or before 120 days after the end of the month of first sale of production from the well. |
| Later payments | On the frequency set in the lease or another written agreement between payee and payor. |
| Later payments, oil, if the lease and agreements say nothing | No later than 60 days after the end of the calendar month in which the oil was sold. |
| Later payments, gas, if the lease and agreements say nothing | No later than 90 days after the end of the calendar month in which the gas was sold. |
If payment isn't made within those limits, the payor has to pay interest starting when the limit runs out, at two percentage points above the rate charged on loans to depository institutions by the New York Federal Reserve Bank, unless a written agreement between payor and payee sets a different rate (§ 91.403(a)). That interest doesn't apply where payments are held for one of the reasons in the next section (§ 91.403(b)), and the obligation to pay it ends when the proceeds and accumulated interest are delivered to the Comptroller (§ 91.403(c)). The statute also lets small amounts pile up and be paid on a longer schedule (§ 91.402(f)).
3When it can be held without interest
Under § 91.402(b), a payor may withhold payment past the deadlines, without interest, if:
- there is a dispute about title that would affect how the payments are divided;
- there is reasonable doubt that the payee has sold or authorized the sale of their share to the purchaser, or that the payee has clear title to the interest in the proceeds;
- a title opinion requirement puts the title, identity or whereabouts of the payee in question, and the payee hasn't met it after the payor made a reasonable request for curative information; or
- the payments are subject to a child support lien or a withholding order or writ under the Family Code.
A payee has no common law claim for breach of contract against a payor for withholding under that subsection, except that for a title dispute the contract requiring payment can say otherwise (§ 91.402(b-1)).
The home page has a plain definition of curative and shows where title review fits in a sale.
4What a division order may contain
A payor is entitled to a signed division order as a condition of payment, and the statute says it may contain only the provisions below (§ 91.402(c)(1)).
| Item | What the statute lists |
|---|---|
| (A) | Effective date. The effective date of the division order, transfer order or other instrument. |
| (B) | The property. A description of the property the oil or gas is produced from, and the type of production. |
| (C) | The interest. The fractional or decimal interest the payee claims, the type of interest, and a certification of title to that share. Unless the parties agree otherwise, it also carries an agreement to tell the payor at least one month ahead of the effective date of any change in the interest, and an agreement to indemnify the payor and repay payments made if the payee doesn't have merchantable title to the production sold. |
| (D) | Suspension. Authorization to suspend payment until any title dispute or adverse claim on the interest claimed is resolved. |
| (E) | The payee. Name, address and taxpayer identification number. |
| (F) | Settlements. Provisions for the valuation and timing of settlements of production to the payee. |
| (G) | Other rights. A notice that other statutory rights may be available to a payee with regard to payments. |
The rules around it
- The division order doesn't amend a lease or operating agreement between the interest owner and the lessee or operator, or any contract for the purchase of oil or gas (§ 91.402(c)(2)).
- If an owner in a producing property won't sign because the order has provisions beyond those in subsection (c), the payor may not withhold payment solely for that reason. If the owner refuses to sign one that has only the provisions in subsection (c), the payor may withhold payment without interest until it is signed (§ 91.402(e)).
- Division orders are binding for the time and to the extent they have been acted on and made the basis of settlements and payments. They stop binding from the time notice is given that settlements won't be made on that basis, and either party can end one on 30 days written notice (§ 91.402(g)).
- Signing one doesn't change or relieve the lessee's obligations under the lease, including any obligation to market production as a reasonably prudent lessee. A provision in a division order between a payee and its lessee that contradicts the lease is invalid to the extent of the contradiction (§ 91.402(h)).
- A division order may be used to clarify royalty settlement terms in the lease. For oil or gas sold in the field where it is produced, or at a gathering point in the immediate vicinity, the terms "market value," "market price" and "prevailing price in the field," when a lease uses them as the basis of valuation, mean the amount the seller realizes at the mouth of the well in an arm's-length transaction (§ 91.402(i)).
- The statute prints a model form, worded for oil payments (§ 91.402(d)).
5What must be on the stub
When a royalty interest owner is paid under a division order, lease, servitude or other agreement, the payor has to put twelve items on the check stub, an attachment to the payment form, or another remittance advice that comes with the payment (§§ 91.501 and 91.502).
| No. | What the statute lists |
|---|---|
| 1 | The lease, property or well name, any identification number for it, and the county and state where it is. |
| 2 | The month and year of the sales being paid for. |
| 3 | The total barrels of oil or total gas sold. |
| 4 | The price per barrel or per MCF. |
| 5 | The total state severance and other production taxes paid. |
| 6 | The windfall profit tax paid on the owner's interest. The statute still lists it. The RRC's royalties FAQ marks the tax as repealed. |
| 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. This is the 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. |
| 12 | An address and telephone number where you can get more information about the payment and ask questions. |
- If no division order gives the property description called for in § 91.402(c)(1)(B), the payor has to give at least that information before or with the first payment (§ 91.503).
- A payor that gives the stub information some other way every month doesn't have to put it on the stub. But if the payment is a paper check delivered by mail or private delivery service, the payor can't use another way unless it, or a previous payor, has the owner's consent (§ 91.506).
- When the payor changes, the new payor has to give each payee written notice at the payee's most recent known address. The notice has to include items 1, 2 and 12 above, the property description described in § 91.503, and the payor's telephone number. A division order, check stub or attachment can serve as the notice (§ 91.407). A payor that owes interest and doesn't give the notice owes two percent more than the § 91.403 rate.
6A decimal you can check by hand
These are the two formulas the home page already uses, run on one made-up owner so each number can be checked.
Illustration, not any real owner's interest
| Step | Arithmetic | Result |
|---|---|---|
| The owner's share of the unit's acres | 10 ÷ 640 | .015625 |
| Times the lease royalty of 1/4: the decimal | .015625 × .25 | .00390625 |
| Back to net royalty acres (NRA) from the decimal | .00390625 × 640 × 8 | 20 NRA |
| The same NRA from the deed numbers | 10 × (.25 ÷ .125) | 20 NRA |
| The owner's share of a stub line that reads 1,000 barrels sold | 1,000 × .00390625 | 3.90625 barrels |
Both routes land on 20 NRA, so the two formulas on the home page agree. To see it in the worksheet, choose "My check stub" and enter .00390625 and 640, or choose "My deed or lease" and enter 10 net mineral acres at a 1/4 royalty. The 8 is the 1/8 royalty that one NRA is defined against.
If your stub doesn't match
A decimal that differs from this arithmetic is a question to ask the payor, not proof of a mistake. The formula uses only your acres, the unit's acres and the lease royalty. It doesn't know how your lease or the unit paperwork allocate production, whether your interest is a part of the tract, or whether an earlier sale, lease or other burden changed what you own. Any of those could produce a different decimal without an error by the payor. The home page glossary says production in a pooled unit is usually shared by acreage, and "usually" matters here. A division order doesn't amend the lease (§ 91.402(c)(2)), so the lease and the unit papers stay the place to check. A working interest decimal is a different calculation, and this page doesn't cover it.
7Asking questions and fixing a wrong stub
The statute gives a royalty owner a few written requests, each with its own clock. Certified mail matters for most of them.
| Request | What the payor has to do | Section |
|---|---|---|
| Notice by mail that payment is late | Pay the proceeds, or state a reasonable cause for nonpayment in writing, within 30 days after getting the notice. The notice is required before a court action for nonpayment. | § 91.404(a) and (b) |
| Certified-mail request to explain deductions or adjustments the stub doesn't explain | Explain them by certified mail within 60 days after getting the request. | § 91.504(a) |
| Certified-mail request about the heating value of the gas | Send, by certified mail within 60 days, a copy of the Form G-1 filed with the RRC, or a stub or statement with the information. | § 91.504(b) |
| Certified-mail request, if you were paid in the preceding calendar year, for a report of lease and well identification for that year | Send the report by certified mail within 60 days. It lists the identification numbers and names, the field, the county and state, and the RRC lease identification number. | § 91.504(c) and (d) |
| Certified-mail question about a payment, other than the ones above | Answer by certified mail within 30 days after getting the request. | § 91.505 |
| Written certified-mail request for stub or property information you didn't get on time | Provide it by certified mail within 60 days. If it doesn't, either party may request mediation. | § 91.507(a) to (c) |
If the 60 days pass on a request under § 91.504 or § 91.507, the royalty interest owner may bring a civil action to enforce it, and the prevailing party is entitled to reasonable court costs and attorney's fees (§ 91.507(d)). A payee with a claim for late proceeds and interest can sue in any court of competent jurisdiction in the county where the well is located (§ 91.404(c)). If a suit is filed to collect proceeds and interest under the subchapter, a judgment for the plaintiff has to include reasonable attorney's fees and, if the actual damages fall below a statutory floor, an added amount that brings the total up to that floor (§ 91.406). At least once every 12 months the payor has to send each royalty interest owner it pays a statement of the owner's right to make requests under § 91.504 (§ 91.504(e)).
8How this connects to a sale
When we ask an owner for a recent check stub or the division order, it is because the operator, the owner number and the decimal are on them. The statute calls the paper that moves a payee's share to a new payee a transfer order: an agreement signed by the payee and the new payee that directs the payor to pay another person a share (§ 91.401(4)). This page doesn't describe how any sale closes. The offer letter and the closing steps are on the home page.
Sources
Last checked . Each page below was opened that day. The Texas statutes site said its statutes were current through the 89th 2nd Called Legislative Session, 2025. Laws and agency pages change, so check the current text before relying on any of it.
- Texas Natural Resources Code, chapter 91, subchapter J§§ 91.401 to 91.407: definitions; time for payment; division orders; interest; nonpayment; exemptions; fees and minimum award; change of payorhttps://statutes.capitol.texas.gov/Docs/NR/htm/NR.91.htmOpened September 29, 2026
- Texas Natural Resources Code, chapter 91, subchapter L§§ 91.501 to 91.507: check stub information; property description; deductions, heating value and lease identification; other information; exemption; enforcement. Same page as the first source.https://statutes.capitol.texas.gov/Docs/NR/htm/NR.91.htmOpened September 29, 2026
- Railroad Commission of Texas, Royalties FAQLimits of RRC authority; State Bar and Comptroller referrals; well identification numbers; the disclosure that a lease or contract may differ from the statute; the windfall profit tax notehttps://www.rrc.texas.gov/about-us/faqs/royalties-faq/Opened September 29, 2026
- Texas Comptroller of Public Accounts, Crude Oil and Natural Gas Taxes FAQRoyalty interest question: no authority over royalty payments; reported volumes and valueshttps://comptroller.texas.gov/taxes/crude-oil/oil-gas-faq.phpOpened September 29, 2026
- Railroad Commission of Texas, Production Data Query FAQFinding a lease number from an API numberhttps://www.rrc.texas.gov/about-us/faqs/oil-gas-faq/production-data-query-system-faqs/Opened September 29, 2026
- This site's home pageWorksheet, glossary and net royalty acre formulas used in the examplehttps://mineral.land/#worksheet
If you want to go further
The worksheet on the home page has a "My check stub" mode: enter the decimal and the unit's acres and it shows the net royalty acres. If you'd like us to look at an interest, the request form asks for the county and state, the operator and the decimal or net mineral acres. Sending it commits you to nothing.