Is my operator paying a fair oil price?

Your royalty is figured on what the oil sold for, less whatever your lease allows the operator to deduct. The public numbers to compare with are what Texas buyers paid at the lease (the EIA's first purchase price), the WTI average, and, when your operator is a public company, the average price it reported to investors. Your price will usually sit a little under WTI.

The Energy Information Administration surveys the companies that first buy crude oil from producers and publishes the average price per barrel by state, every month. It is the closest public number to a price at the lease, so it already includes the trucking and quality discounts that WTI leaves out. It is published about two months after the month.

Public companies report an average realized oil price every quarter in their SEC filings. We read those filings for the operators we can link to a public company and show the price for the quarter you were paid for. It is an average across the whole company, not the price on your lease, and some companies report it including hedges, which we label.

There is no state rule, so the bands here are ours. Within $1 under a reference, or above it, we call close. From $1 to $5 under is the range quality and trucking usually explain. More than $5 under is where our audit starts asking questions. An operator can have a good reason for a wide gap, and asking is how you find out.

Texas oil varies in quality and in how far it has to travel. A lease far from a pipeline pays more to have oil trucked away, and some leases sell to a buyer at a posted price under the market. Ask the operator who the buyer is and what the price was before any charges.

See who the state lists as buying your oil

The month the oil was sold, which your stub calls the production or sale month, not the month you were paid. A check that arrives in September is usually for a July sale.