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Late payment interest
State of the lease
Interest owed on the late payment
$27.50
February 2025 production was paid 87 days after the deadline. Payors do not always add it unless you ask.
Ask for it. Payors rarely add it on their own!
- Oil due by$1,644.17 paid
- Apr 29, 2025
- Oil days late
- 87
- Oil interest
- $25.47
- Gas due by$199.99 paid
- May 29, 2025
- Gas days late
- 57
- Gas interest
- $2.03
- Rate
- 6.50%
- Total interest
- $27.50
Fed primary credit rate 4.50% on 2025-04-29, plus 2 points = 6.50%. Simple interest, actual days over 365. Rule: Texas Natural Resources Code §91.402 and §91.403. Fed rate table current to Sep 28, 2026.
When interest is not owed
The three rules in brief
| State | Payment due | Interest |
|---|---|---|
| Texas | Oil 60 days and gas 90 days after the end of the month of sale. First payment on a well: 120 days after the end of the month of first sale. | Two points above the Federal Reserve primary credit rate, from the deadline. Simple interest. |
| Oklahoma | Oil: the last day of the second month after the sale month. Gas royalty paid through the operator: the last day of the third month. First payment: six months after first sale. | 12% a year, compounded annually, counted from the end of the month of sale until paid. |
| North Dakota | 150 days after the oil or gas is marketed. | 18% a year after that, until paid. |
A worked example
February 2025 oil and gas on the sample lease was paid on July 25, 2025. In Texas:
- Oil was due 60 days after February 28: April 29, 2025. It was paid 87 days late. On $1,644.17 at 6.5% (4.50% Fed rate plus 2 points), that is $25.47.
- Gas was due 90 days after February 28: May 29, 2025. It was paid 57 days late. On $199.99, that is $2.03.
The total is $27.50. Small, but it is money the statute says the payor owes, and a payor that sees a correct figure in a polite letter usually pays it. Our Texas guide explains the rule step by step.
Reading the result
If the days late is zero, the payment met the deadline. If the payor held the money for a title problem, a doubt about who should be paid or an unsatisfied title requirement, the statutes usually excuse the interest. Ask the operator why the money was held before you ask for interest.
Questions owners ask
Common questions
Short answers. Sources are at the end of the page.
How long does a Texas operator have to pay royalties?
Oil proceeds are due 60 days after the end of the calendar month in which the oil was sold, and gas proceeds 90 days after the end of the month in which the gas was sold. The first payment on a new well is due 120 days after the end of the month of first sale. This is Natural Resources Code section 91.402.
What interest is owed when a Texas royalty is paid late?
Section 91.403 sets it at two percentage points above the rate charged on loans to depository institutions by the New York Federal Reserve Bank. It starts when the section 91.402 time limit runs out.
When can a payor hold royalties without paying interest?
Section 91.402 allows a payor to withhold, and section 91.403 excuses the interest, where there is a dispute about title that would affect distribution, a reasonable doubt that the payee has clear title or has authorized the sale of its share, or a title opinion requirement that puts the payee's title, identity or whereabouts in issue. Payments under a child support lien or a withholding order are also held.
Which month do I count from?
The month the oil or gas was sold, which your stub calls the production or sale month. A check that arrives in September is usually for a July sale, so July is the month to enter.
What if the payor says it held the money for a title problem?
Ask which title question it is and what it needs from you. A hold for a listed title reason does not carry interest, but a hold for no stated reason does once the deadline has passed. The guide explains the rule step by step.
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