Your minerals are producing. The check does not match. Scott Templeton is a San Angelo oil and gas litigation lawyer who represents mineral owners, royalty owners, surface owners, and small operators in disputes over leases, royalties, and well site conduct. Templeton Law Firm works throughout Tom Green County and the surrounding Permian Basin counties, in English and Spanish.
Call (325) 482-9120 or contact the firm online about your lease or royalty problem.
What Kinds of Oil and Gas Disputes End Up in Court?
Disputes over money, over the lease, and over the land. Money disputes cover unpaid or underpaid royalties, improper post production deductions, and misallocated interests. Lease disputes cover whether a lease is still held by production, whether pooling was authorized, and whether implied obligations to develop or market were met.
The land category covers surface damage, road and pad placement, saltwater disposal, and interference with ranching or farming. San Angelo sits inside the area the Railroad Commission of Texas identifies as the Permian Basin, and Tom Green County falls in the Commission's District 7C.
When Is Your Royalty Check Legally Late in Texas?
Texas sets deadlines by statute. Under Section 91.402 of the Natural Resources Code, proceeds have to reach you on the following schedule.
| Payment | Deadline |
| First payment after production begins | Within 120 days after the end of the month of first sale |
| Ongoing oil payments | Within 60 days after the end of the month the oil is sold |
| Ongoing gas payments | Within 90 days after the end of the month the gas is sold |
The 120 day first payment deadline is fixed. The 60 and 90 day figures apply where the lease or written agreement does not specify a different payment frequency, so check the lease before assuming a payment is late.
An operator can withhold payment without penalty in specific situations, mainly a genuine title dispute, a reasonable doubt about your ownership, or a title opinion requirement that puts your identity or interest in question. "We are still working on it" is not one of the listed reasons.
Do You Earn Interest on Late Royalty Payments?
Yes, unless your lease says otherwise in writing. Section 91.403 sets the rate at two percentage points above the rate the New York Federal Reserve Bank charges on loans to depository institutions.
Interest does not accrue while payment is properly suspended for one of the permitted reasons. That makes the reason given for the suspension worth examining closely, because an unsupported title objection can convert months of silence into an interest bearing obligation.
Do You Have to Give Notice Before Suing Over Royalties?
Yes, and skipping it can end the case. Section 91.404 makes written notice by mail to the payor a prerequisite to filing suit. The payor then has 30 days after receiving it to pay or to state in writing a reasonable cause for not paying.
There is a strong incentive to use it. Section 91.406 requires the court to award reasonable attorney fees to a royalty owner who wins. Venue sits in any court of competent jurisdiction in the county where the well is located, which keeps many of these cases in Tom Green County or a neighboring District 7C county.
A properly drafted demand letter resolves more of these than a lawsuit does. Call (325) 482-9120.
Can You Make the Operator Explain the Deductions?
Yes, in writing, with a deadline attached. Section 91.504 lets a royalty owner send a certified mail request for an explanation of deductions and adjustments that were not spelled out on the check stub. The payor then has 60 days to respond, also by certified mail. Sending the request by regular mail may not start the clock at all.
The same section covers gas heating value data and an annual report identifying lease and well names, Railroad Commission identification numbers, field names, and the county. Payors must notify owners of these rights every year. Most owners never use them, and the answers often reveal the dispute.
Does Signing a Division Order Change Your Lease?
No. A division order is a payment instruction, not an amendment. Section 91.402(h) states plainly that executing one does not change or relieve the lessee's obligations under the lease, including the obligation to market production as a reasonably prudent lessee.
The statute also limits what a division order may contain, and refusing to sign one that goes beyond those permitted terms does not cost you the right to be paid. Where an operator prepared an erroneous division order and kept the underpayment, Texas courts have allowed the owner to recover the full shortfall.
What if a Well Site Interferes With Your Ranching Operation?
You may have a remedy under the accommodation doctrine. In Texas the mineral estate is dominant, meaning an operator has the right to use as much of the surface as is reasonably necessary. That right is not unlimited.
Under Getty Oil Co. v. Jones and, more recently, Merriman v. XTO Energy, Inc., a surface owner must show three things. The operator's use has to preclude or substantially impair an existing surface use. You have to have no reasonable alternative way to continue that use. And a reasonable, industry accepted alternative has to be available to the operator on the leased premises.
A use that is merely more convenient for you does not qualify. For working ranches around the Concho Valley, that distinction is usually where the case is won or lost.
Can the Railroad Commission Fix a Royalty Problem?
No, and this is the most common wrong turn mineral owners take. The Railroad Commission of Texas regulates permitting, production, plugging, and environmental compliance. It states directly that it has no jurisdiction over royalty payments or over oil and gas leases and agreements, and that it cannot intervene in royalty matters.
The Commission is still useful. Its production data query and public map let you verify what a well produced and who operates it, and that becomes evidence in a royalty case. It is a source of proof, not a forum for relief.
How Long Do You Have to Sue Over Underpaid Royalties?
Four years for a claim based on the lease, under Section 16.051 of the Civil Practice and Remedies Code, and four years for fraud or breach of fiduciary duty under Section 16.004.
Do not count on the discovery rule to rescue a late claim. In HECI Exploration Co. v. Neel, the Texas Supreme Court held that Railroad Commission filings are a ready public source of information, so royalty owners are expected to exercise reasonable diligence rather than wait to be told. Under that reasoning, the clock generally keeps running whether or not you noticed the shortfall.
What Does It Take to Prove a Royalty Case?
Reading the lease, the division order, the check stubs, and the production records against each other until the numbers either add up or do not. These files are contract cases wearing an industry costume, and contract litigation is what I have done in West Texas since 1998.
I grew up in San Angelo and took my undergraduate degree at Angelo State University. Suits are filed in the 51st, 119th, 340th, or 391st District Courts of Tom Green County. This work sits alongside the business and commercial disputes handled in San Angelo and the firm's work on contract disputes, including lease and royalty agreements.
Bring two years of check stubs and a copy of your lease. Call (325) 482-9120.
Production Does Not Pause While a Claim Sits
Wells keep producing while a royalty question goes unanswered, and every month adds another statement that will have to be reconstructed later. The deadlines in the Natural Resources Code run in days. The limitations period runs in years. Neither one waits for you.
You will find Templeton Law Firm at 905 S. Abe Street in San Angelo, weekdays from 9 AM to 5 PM. Fee arrangements for oil and gas matters are discussed during your consultation. Call (325) 482-9120, email scott@templetonlawfirm.com, or discuss your oil and gas dispute with Templeton Law Firm.
Oil and Gas Questions Mineral Owners Ask
My lease says royalty is valued "at the well." What does that mean for deductions?
It usually means post production costs can be subtracted. Texas courts have treated a value at the well as already reflecting the cost of getting the product to market, so language forbidding deductions can be read as having no effect. Leases with an add back provision can produce the opposite result.
How do I find out who is holding royalties that were never paid to me?
Start with the operator, then check the state. Proceeds held in suspense stay with the payor until the dispute clears, and unclaimed proceeds are eventually turned over to the Texas Comptroller under the unclaimed property law. The Railroad Commission's production records will identify the current operator of the well even when the company that signed your lease no longer exists.
I inherited mineral interests and never signed anything. Am I still owed money?
Very likely. Ownership passes by will or by intestate succession whether or not paperwork was filed with the operator. Confirming the chain of title is the first step to releasing anything held in suspense.
Is my dispute with the State of Texas or with the operator?
Almost always the operator. The Texas General Land Office leases minerals under state owned land such as Permanent School Fund tracts and riverbeds. If your interest came from a private deed or inheritance, the State has no role and the dispute belongs in district court.