The formula
Four things set an oil royalty line. The first is the volume the lease sold in the month. The operator reports it to the Railroad Commission, and the state publishes it RRC, Production Data Query. The second is your decimal interest, your share of the whole lease, which your division order states and every stub must print §91.502(9). Multiply them and you have your barrels.
The third is the price per barrel, which the stub must show §91.502(4). The fourth is the tax. Texas taxes oil at 4.6 percent of market value, or 4.6 cents a barrel if that is more Tax Code §202.052. The stub must show the taxes paid §91.502(5).
The whole thing, in symbols
Your barrelslease barrels × decimal
Gross valueyour barrels × price
Severance taxgross × 0.046
Net, what the line paysgross − tax
Your decimal is worth a moment, because it never changes from line to line. It is the royalty fraction in your lease, times your net acres, divided by the acres in the unit:
Your acres in the unit
The bar is drawn to scale: 5 acres out of 1,280 is 0.39 percent of the unit.
One real month, line by line
The lease is INTERSTATE 8-32 C in Midland County, Railroad Commission lease 58035. In July 2026 the state record shows 13,514 barrels of oil. The owner and decimal are a sample, the ones behind our sample audit: a 1/4 royalty on 5 net acres in a 1,280-acre unit. The price is the U.S. Energy Information Administration’s WTI monthly average for July 2026, $80.46 EIA, WTI. Read the marked-up line from top to bottom.
OIL · SALE MONTH 07/2026
SAMPLE OWNER
Oil sold, whole lease
State record, July 2026
13,514 bbl
Look it up. It is public and free.
Your decimal
1/4 × 5 ÷ 1,280
0.00097656
From your division order. The same on every line.
Your barrels
13,514 × 0.00097656
13.1972 bbl
A stub often prints 13.20.
Price per barrel
WTI, July average
$80.46
Your payor's price will differ. Watch the gap.
Gross value
13.1972 × $80.46
$1,061.85
Your share of the sale, before tax.
Severance tax
4.6% of gross
−$48.85
The state's rate for oil.
Net, this line pays
$1,013.00
Rebuilt from public numbers.
INTERSTATE 8-32 C, Midland County, Railroad Commission lease 58035. The barrels are the state's figure; the owner and decimal are a sample. The price is the WTI monthly average, not any payor's price.
The sample owner’s 13,514 barrels become 13.1972 of their own. At $80.46 that is $1,061.85 gross, the 4.6 percent tax is $48.85, and the line pays $1,013.00. A stub would likely print the barrels as 13.20.
Public volume, public price, your decimal. That is the whole check.
What a price move does
Royalty rises and falls with the price in proportion, because the barrels and your decimal stay the same. Here are the same 13.1972 barrels at three prices. Only $80.46 was a real price; the other two are round numbers for comparison.
| Price | Gross | Tax | Net |
|---|---|---|---|
| $60.00 | $791.83 | −$36.42 | $755.41 |
| $80.46 | $1,061.85 | −$48.85 | $1,013.00 |
| $100.00 | $1,319.72 | −$60.71 | $1,259.01 |
So when your check falls, the first question is whether the price fell, the barrels fell, or something else changed. The stub prints the price and the barrels, so you can tell which without asking anyone.
Why a stub will not match to the cent
Your stub and this arithmetic will not agree exactly, and most of the gap is ordinary. Six things move it:
| What differs | Why |
|---|---|
| Price | The payor sells under its own contract. WTI is the benchmark, not the price paid. What you watch is the gap, and whether it steadies. |
| Volume | The state record is what the operator reports. A purchaser computes the quantity and corrects it for gravity and temperature and for impurities, as the model division order in section 91.402(d) puts it. |
| Timing | The stub covers the month the oil was sold. A payment can come after the deadline, or in a later check, and adjustments can fall in a different month. |
| Rounding | Decimals carry eight places and a stub prints fewer. The gap is cents. |
| Tax | The rate is 4.6 percent, but qualifying enhanced recovery projects pay 2.3 percent and a well with the two-year inactive well exemption pays nothing. |
| State fee | The Comptroller also charges an oil field clean-up fee of $0.00625, five-eighths of a cent, on each taxable barrel Comptroller, oil tax. On the sample owner’s barrels that is about $0.08. |
Where a lease says the royalty is on “market value” or “market price” of oil sold in the field, Texas defines the term as the amount realized at the mouth of the well by the seller in an arm’s-length transaction §91.402(i). Read your own lease for the valuation clause. A division order cannot amend it.
Check your own line
- Find the lease. Use the Texas lease lookup and pick the sale month on your stub. The barrels sold are on the lease page.
- Multiply by your decimal. Your stub’s volume should land within a few percent. The lease royalty estimator does two years at once.
- Compare the price. The oil price check sets your stub’s price against that month’s WTI average.
- Check the tax. The tax column should be 4.6 percent of the gross. The severance tax check divides it for you.
When the numbers are off
A small gap in price or volume is normal. A gap that is large, or that changes month to month, is a question. Ask for the volume and price the payor used. A written request for information about a payment, sent by certified mail, must be answered by certified mail within 30 days NRC §91.505.
The question to ask
Please send me the oil volume and the price per barrel you used for the July 2026 sales on property INTERSTATE 8-32 C, owner number 0044817, and explain any difference from the volume reported to the Railroad Commission.
If the state record shows barrels your stubs never account for, the Texas royalty audit lays every month against it. For your rights when a payment is late, see Texas royalty owner rights.