You check the mailbox, open the envelope, and the number is smaller than you expected. It happens to every mineral rights owner at some point. Before you pick up the phone, here are the most common reasons a royalty check comes in low.

Production Declined

Wells produce less over time. For horizontal shale wells, the drop is steep: typical first-year decline rates are 60-75% in formations like the Bakken, Eagle Ford, and Permian. A well that made 500 barrels a day in month one might make 150 barrels six months later and 75 barrels a year after that. Even at 5 years old, Permian and Bakken wells still decline at roughly 17% annually.

Conventional vertical wells decline more gradually, settling into a terminal decline rate of about 5-10% per year in their mature phase.

If your checks have been gradually shrinking over several months, natural decline is the most likely reason.

Commodity Prices Dropped

Your royalty is based on the price the operator actually received for the product, not the headline price on the news. If oil prices fell from $80 to $65 between payment periods, your check will reflect that, even if the well produced the same volume.

The gap between the benchmark price and your realized price can be significant. In the Permian Basin, natural gas at the Waha Hub traded at negative prices for 158 days in 2024 due to pipeline constraints, averaging well below Henry Hub prices. For oil, WTI Midland traded at a $10-15/barrel discount to WTI Cushing in 2018 when pipeline capacity lagged production growth.

For more on why your check price doesn't match the headline, see our pricing post.

Deductions Increased

Operators deduct post-production costs before paying you: gathering, transportation, processing, compression, and marketing. These can take a significant bite. In one documented example, post-production deductions consumed 88% of the gross natural gas royalty, with gathering alone accounting for over 60%.

Whether your lease allows these deductions depends on the lease language. "At the wellhead" leases generally permit deductions for costs incurred after the wellhead. "Gross proceeds" or "at the point of sale" leases may prohibit them. The Texas Supreme Court addressed this distinction in BlueStone v. Randle (2021), ruling that "gross value received" language prohibits post-production deductions even when other lease language is ambiguous.

Compare the deduction lines on your current stub to previous months. If one category jumped, that's worth investigating.

The Operator Changed How They Calculate

Sometimes operators change the point of sale, the pricing index, or the way they allocate costs across wells in a unit. A ProPublica investigation found that manipulation of costs and pricing by oil companies has kept billions in royalties from private and government landholders. The federal government has recouped over $4 billion in unpaid royalties over the past three decades, and DOI auditors uncovered more than a dozen "willful" deception instances since 2011.

Notable cases include Chesapeake Energy deducting marketing fees paid to its own subsidiary in Oklahoma, and a West Virginia jury ordering $404 million (including $270 million in punitive damages) for cheating royalty owners.

These are extreme examples, but subtler calculation changes happen regularly. If your payment dropped without an obvious change in production or commodity prices, ask the operator what changed.

Prior Period Adjustment

If the operator overpaid you in a previous month, they'll deduct the correction from a future check. Look for a negative line item labeled "prior period adjustment" or "PPA." PPAs are relatively common and result from volume reconciliations, price adjustments after final settlement, or division-of-interest changes. Natural gas PPAs are more frequent than oil because actual volumes and NGL yields aren't finalized until gas plant statements are received.

For more detail, see our post on prior period adjustments.

Suspense Hold

If there's a title question, a pending division order, or a change of ownership that hasn't been processed, the operator may hold part or all of your payment in suspense. Common triggers include an unsigned W-9, unsigned division order, questionable mineral title, or invalid mailing address. In an industry survey, 58% of respondents said suspense is their largest unclaimed property category.

The money isn't lost, but it won't be released until the issue is resolved. In Texas, operators must pay statutory interest on funds held past the deadline (set at 2 percentage points above the NY Fed discount rate). After the dormancy period (3 years in Texas, 5 years in Oklahoma), suspended funds are escheated to the state's unclaimed property fund.

Your Decimal Interest Changed

If a new division order was issued and your decimal interest went down, your payments will be smaller going forward. This can happen when additional heirs are identified, a title correction is made, or the unit is reconfigured. Many mineral owners overestimate their ownership percentage after inheritance because fractional math compounds (inheriting 1/4 of Mom's 1/3 interest = 1/12, not 1/4).

Check whether you signed a new division order recently. If your decimal went down without explanation, ask the operator's division order department for the title opinion calculation.

The Well Was Shut In

A well that's temporarily shut in (not producing) generates no revenue. During the 2020 COVID price crash, U.S. crude production fell 8% on an annual basis, dropping from about 16,000 producing wells in North Dakota to roughly 12,800 by mid-2020. Even under normal conditions, wells are shut in for maintenance, workovers, pipeline outages, or reservoir management.

Post-shut-in performance can also be affected: analysis shows an average 25% decrease in oil rate and 31% decrease in gas rate for wells shut in for 6-24 months.

Taxes Changed

State severance tax rates directly reduce your net payment. Current rates for major producing states:

State Oil Gas Source
Texas 4.6% 7.5% NCSL
Oklahoma 7% (5% first 36 mo.) 7% (5% first 36 mo.) OK Policy Institute
North Dakota 10% combined varies ND Tax Commissioner
Wyoming 6% 6% WY Legislature
Louisiana 12.5% (6.5% post-7/2025 wells) varies LA Dept. of Revenue
Pennsylvania No severance tax Impact fee NCSL

If your gross revenue looks right but your net is lower, compare the tax lines to previous stubs.

What to Do

Pull out the last three to six months of check stubs and compare them line by line. Look at production volumes, prices, deductions, and decimal interests. Most of the time, the explanation is visible in the numbers. Compare volumes on your stub to what the state oil and gas commission reports for the same well, using sales volumes, not production volumes, since operators pay on what is sold.

If you can't figure it out, call the operator's owner relations department. Have your owner number, well name, API number, and the specific check stub ready. "Why did my check go down?" is harder for them to answer than "My gathering deduction on Well X went from $45 to $120 between March and April. Can you explain the change?"

Consider joining the National Association of Royalty Owners (NARO) for educational resources and advocacy. For persistent issues, a mineral rights attorney or royalty auditor can review the operator's calculations against your lease terms.

Tracking your payments over time in MinRight makes these conversations easier. When you can pull up the payment history, compare this month's deductions to last month's, and point to the specific line that changed, you get answers faster.

For help understanding what each line on your stub means, see our check stub walkthrough.