Royalty & mineral owners
What you are owed, and when.
Most owner questions have the same six answers. They are below, written from the Texas statute rather than from custom — including the parts that work in your favour and against ours.
Payments
Why the first check takes so long
The single most common owner question, and the answer is a statute rather than a policy. Texas Natural Resources Code § 91.402 sets the clock.
How long until the first payment?
Proceeds from a well in Texas must be paid on or before 120 days after the end of the month of first sale of production from that well. Four months is not a stall; it is the outside edge the statute allows, and it exists because title has to be examined and every owner in the tract identified before anyone is paid.
And after that — how often?
Whatever your lease or written agreement says. If it is silent, the statute fills the gap: 60 days after the end of the calendar month in which the oil was sold, and 90 days after the end of the calendar month for gas.
Why did I get nothing this month when I got a check last month?
Usually because the balance was too small to cut. Under the statutory division order terms, proceeds of less than $100 may be accrued and held until the total reaches $100 or twelve months pass, whichever comes first — so a small interest pays annually rather than monthly. Amounts under $10 may be held until production ceases altogether.
Volumes also move. A well declines, a well is shut in for a workover, gas prices change. A month with no production is a month with no proceeds.
Do I get interest if payment is late?
Yes, if it is late for no permitted reason. Interest runs from the expiration of the § 91.402 deadline at two percentage points above the rate charged on loans to depository institutions by the New York Federal Reserve Bank, unless a written agreement between you and the payor sets a different rate.
Interest does not run where payment was withheld for one of the reasons the statute permits — see below.
Suspense
Why a payment gets held
An operator may hold your money without paying interest in a short and closed list of situations. It is worth knowing the list, because if your payment is suspended it is almost certainly one of these, and most of them you can clear yourself.
- A title dispute that would affect how payments are distributed.
- Reasonable doubt that you sold or authorised the sale of your share, or that you hold clear title to the interest.
- An unsatisfied title-opinion requirement that puts your title, identity or whereabouts in issue — and that you have not cleared after a reasonable request for curative information.
- A child-support lien or an order or writ of withholding under Chapters 157 or 158 of the Family Code.
That is the whole list. If a payment is in suspense, ask which of these applies and what document releases it. In the ordinary case it is a missing signed division order, an address we cannot deliver to, or an ownership change that was never reported — all of which you can fix in an afternoon.
Division orders
What a division order is — and what it cannot do
A division order states your decimal interest in a well and directs how you are paid. A payor is entitled to receive a signed one from you before paying proceeds. Texas is unusual in that the statute prescribes what the instrument may contain, and the list is a ceiling.
Can a division order change my lease?
No. The statute says so twice — once in the text and once in capital letters inside the statutory form itself:
If a division order you are handed appears to change your royalty, alter a deduction, or waive something in your lease, that is worth stopping over. Ours will not, because the statute does not permit it to.
What is a division order allowed to contain?
Only these: the effective date; a description of the property and the type of production; your fractional or decimal interest, the type of interest, your certification of title, an agreement to give a month’s notice before your interest changes, and an indemnity if you turn out not to have merchantable title; authorisation to suspend payment during a title dispute; your name, address and taxpayer identification number; provisions for valuation and timing of settlement; and a notice to you that other statutory rights may be available.
Can I get out of one?
Yes. Under the statutory form, termination takes effect on the first day of the month that begins after the thirtieth day following written notice of termination received by either party.
Forms
The paperwork, and when you need it
Each of these is a fillable PDF. Fill it on screen, print it, sign it, and mail or email it back. If you would rather we send you a copy already filled in with what we have on file, write to royalty@caprockog.com and ask.
Division order
Confirms your decimal interest and directs payment. Ours is built on the statutory form at § 91.402(d) and contains nothing beyond what the statute permits.
Not offered as a download. A division order is issued to a named owner for a named property by the company that is actually paying them — it is not a blank form. If you need one, write to royalty@caprockog.com and it will be prepared for your interest.
Direct deposit
Have proceeds sent to your bank instead of by cheque. Faster, and it cannot be lost in the mail.
Change of address
The most common reason an owner stops being paid. If mail comes back undelivered, the interest goes to suspense.
Name or ownership change
Marriage, divorce, a deed, or a transfer of the interest into a trust or a company.
Affidavit of heirship
Used to establish who inherited an interest where there was no probate. Needs two disinterested witnesses with personal knowledge of the family.
Form W-9
The IRS form giving us your taxpayer identification number. Without it, federal backup withholding applies to your proceeds.
Succession
When an owner dies
Interests outlive people, and this is the single most tangled thing that lands on an owner relations desk. The short version: the interest does not disappear and it does not revert to the operator. It passes to whoever inherited it — and payment stays in suspense until the record shows who that is.
Which document you need depends on what happened:
- There was a probated will. Send the letters testamentary and the probated will, or a certified copy.
- There was no probate. An affidavit of heirship is the usual route — the family history sworn before a notary and recorded in the deed records of the county where the land lies. The statutory form is at Texas Estates Code § 203.002, and § 203.001 is what makes a recorded one evidence of heirship — though it only carries that weight once it has been of record for five years. We will normally accept one before then; § 201.053 protects a payor who relies on it. We ask for two disinterested witnesses with personal knowledge of the family, which is our requirement rather than the statute's.
- The interest was in a trust. Send the certification of trust and the instrument naming the successor trustee.
- The chain is contested, or nobody agrees. That is a heirship determination in probate court under Estates Code Chapter 202, and it is beyond what an operator can resolve from a desk.
Write to royalty@caprockog.com before you spend money on any of it. We will tell you what we actually need, and often it is less than people expect.
If we do not pay you
Your route, and the notice you have to send first
This is on our own site because you are entitled to know it, and because an operator unwilling to print it is telling you something.
If a payor fails to pay you on time, Texas requires you to give the payor written notice by mail of that failure — and that notice is a prerequisite to starting a lawsuit. The payor then has 30 days from receipt to pay, or to answer in writing stating a reasonable cause for not paying.
If it is still unpaid after that, the suit may be brought in any court of competent jurisdiction in the county where the well is located.
Tex. Nat. Res. Code § 91.404(a)–(c)
Send that notice to the mailing address on the contact page. We would much rather answer it in week one than read it from a courthouse.