Video · 5 minutes · captions on
How to read a royalty check stub
Transcript
Introduction
Every royalty check comes with a stub: what was sold, at what price, your share, and what came out. Texas law says what it must show. Here is how to read it, and five checks you can run yourself.
Every box, left to right
Read a stub from left to right: who you are, what was sold, your share, then the money. At the top, the operator who pays you, and your owner number. Quote it whenever you call. Next, the lease. This stub also prints the Railroad Commission's lease number and the county. That number finds your lease in the state's own records. Then your decimal, your share of the lease. It should be the same on every line for the same lease, and match your division order. Each line starts with a month. That is the month the oil was sold, not the month you were paid. Then the volume. On this stub it is your share of the barrels. Some stubs show the whole lease, so read the heading. The price each barrel sold for. Deductions: here, a fee for processing the gas. Many stubs list the severance tax in a column of its own. And what the line paid you. One stub can hold many lines, and they add up to the check.
The month is the sale month
The month on each line is when the oil or gas was sold. A check dated in September usually pays for July. Unless your lease says otherwise, Texas law gives the payor until sixty days after the end of the sale month to pay for oil, and ninety days for gas. A month missing between two stubs, or a month paid twice, is the first thing to ask about.
The math on one line
Every line follows the same arithmetic. Say the lease sold ten thousand barrels, and your decimal is 0.00097656. Your share is nine point seven seven barrels. At seventy dollars a barrel, that is $683.59 before tax. Texas takes a severance tax of four point six percent of oil: $31.45. So this line pays $652.14. Gas works the same way, in thousand cubic feet, with a tax of seven and a half percent, and often with deductions.
Five checks in ten minutes
Now, five checks you can run in ten minutes. One: the decimal matches your division order, to the fifth digit. Two: the volume matches the state. Take the lease's oil sold from the Railroad Commission, times your decimal. Your stub should be within a few percent. Three: the price follows the market. The gap to the West Texas Intermediate average should stay steady from month to month. Four: the tax is at the state rate. Four point six percent of oil, seven and a half of gas. Five: the timing is legal. Sixty days for oil, ninety for gas.
Words you will see
A few abbreviations. BBL is a barrel of oil, forty-two gallons. MCF is a thousand cubic feet of gas. MMBTU is a million British thermal units, the unit gas is often priced in. NGL means natural gas liquids. Sev tax is the severance tax, withheld and paid to the state for you. And the stub says which interest you own: a royalty, an overriding royalty, or a working interest.
When to ask, and how
When something does not add up, write to the owner relations office on the stub. Quote your owner number, and ask one thing at a time. Please send me the run tickets or the sales volume you used for the July 2026 oil sales on this lease, and the price index for that month. Send it by certified mail. The payor then has thirty days to answer, the same way. And keep every stub. A mistake usually shows up as a pattern, and you can only see a pattern with the months side by side.
What to do next
Or try our free stub check. Upload a stub, and it compares every month with the state's records. The sources for this video are on screen.
The sample stub is a real Midland County lease with a made-up owner. The worked example uses made-up numbers.