How to read your Texas royalty statement, line by line

Published September 23, 2026.

A royalty statement, or check stub, is the most informative document a mineral owner ever receives, and it is laid out for an accounting system rather than for a person. Every payor prints a slightly different one, but they all carry the same six things, and once you can find those six on one statement you can read anybody’s.

This guide uses a made-up example throughout. The amounts below are in dollars and carry no currency symbols, the way most stubs print them.

The header

The top of the stub identifies you, the payor and the period.

OWNER NUMBER  0012345        SMITH JOHN A
PAYOR  EXAMPLE OPERATING LLC
CHECK DATE  11/15/2026       PRODUCTION PERIOD  09/2026

The owner number is the payor’s own file number for you, and it is the number to quote in any letter or phone call. It is not your account number at the appraisal district and it is not anything the Railroad Commission issues.

The production period is the month the oil or gas was actually sold, and it usually runs one to three months behind the check date. That lag is normal: the purchaser has to measure, sell, allocate and report before anybody can be paid. A statement dated in November for production in September is not late.

One line per well and product

Below the header the stub lists each property, and within each property one line per product.

PROPERTY 1234567   SMITH UNIT 1H        KARNES COUNTY TX
 OIL     VOLUME  1,000.00 BBL   PRICE 70.00   GROSS VALUE  70,000.00
 GAS     VOLUME  4,200.00 MCF   PRICE  2.50   GROSS VALUE  10,500.00

The property name is the lease name the operator gave it, often with a well number, and the number beside it is the payor’s property number rather than the Railroad Commission’s lease number. Oil is measured in barrels and gas in thousands of cubic feet, written MCF. Some statements carry a third product line for plant products, which are the liquids stripped out of the gas stream at a processing plant and sold separately.

The gross value on each line is the value of the whole well’s production for that month, not your share. Your share comes next.

Volumes move for ordinary reasons: a new well declines steeply in its first two years, a workover takes a well offline, a gas well gets shut in when a pipeline is down. A month with no line for a well you usually see is worth a note, not an alarm.

Your decimal

The number that turns the well into your payment is the decimal interest.

 OIL LINE   INTEREST TYPE  RI   DECIMAL  0.01250000   OWNER GROSS VALUE  875.00

Multiply the gross value on the line by your decimal and you have your gross share. Seventy thousand multiplied by 0.0125 is 875. The gas line gets its own owner gross value the same way, and gas is taxed at the gas rate; this example follows the oil line through to the net. Interest type RI means a royalty interest, and ORRI or OR means an overriding royalty interest.

The decimal itself is the product of three fractions: your tract’s share of the unit, the royalty fraction in the lease, and how much of the minerals under that tract you own. It is normally carried to six, seven or eight places, because a rounding error in the sixth place is real money across a whole unit. What a decimal represents after the lease’s burdens are taken out is the net revenue interest.

A decimal that changes between one statement and the next is worth asking about. It usually means a unit was re-formed, an interest was corrected in the payor’s title records, or somebody in the chain above you was added or removed.

Deductions and taxes

Below your gross share the stub subtracts.

 OIL LINE
   GATHERING AND TRANSPORTATION     -21.88
   SEVERANCE TAX                    -40.25
   NET PAYABLE                      812.87

Post-production deductions cover what it costs to get the product from the wellhead to the point of sale: gathering, compression, dehydration, treating, processing and transportation.

Severance tax is the state’s production tax, collected by the Texas Comptroller. The Comptroller publishes the current rates, which are 4.6 percent of market value for oil and 7.5 percent for gas, with statutory exemptions and reduced rates for some wells. On the oil line above, 4.6 percent of 875 is 40.25.

Two things are worth being clear about. A deduction appearing on your stub is not by itself evidence that it is improper, because most Texas leases permit some post-production costs. Equally, it is not automatically permitted, because what may be taken out of a royalty depends on the exact words of your lease and on a long line of Texas cases reading words like at the well, gross proceeds and market value. The lease governs, and reading it against the stub is the only way to know.

Suspense and adjustments

Two kinds of line surprise people.

A prior period adjustment re-states an earlier month, and it can be positive or negative. Purchasers true up allocations and correct prices for months after the fact, so a negative line is ordinarily a correction rather than a charge. The line normally names the month being adjusted.

A payment that does not arrive at all may be in suspense. A payor holds money when there is a title question, an unsigned division order, a returned check or an address it cannot use, and also when the balance is under the minimum it is allowed to accumulate. Section 91.402 of the Texas Natural Resources Code sets the deadlines for payment and the grounds for holding proceeds, and the companion guide Suspense and unclaimed royalties covers what happens to held money over time.

Keeping them

Statements are the record of a tax year, and nothing else replaces them. The payor will send a 1099 at year end with a single total, but only the stubs show the wells, the volumes, the deductions and the taxes behind that total, and only the stubs let you compare one year to the next or check a 1099 that looks wrong.

Keep them by property and by year, scan them if you can, and keep the division orders with them. Turning a drawer of stubs into tax-ready figures by hand is slow and error-prone work, and statement digitization is coming to NetAcre Plus.

What to do next

Read one statement all the way through with this guide beside it and mark the six things: the owner number, the property, the volume, the decimal, the deductions and the net. Do the multiplication yourself once, on one product line at a time.

Take a line you cannot reconcile to the payor’s owner relations department, quoting the owner number, the property number and the production month, because that is the department whose job it is and it answers most questions in one call. Take depletion, the treatment of a bonus and anything to do with the 1099 to a CPA, and take a dispute about what the lease allows to be deducted to a Texas oil and gas attorney.

NetAcre finds your minerals on the county roll and tells you when something is filed near them, free.