What a new drilling permit near your land means for royalty owners

Updated 11 October 2026 · 4 min read

You've spotted a new drilling permit near your land. Does it mean royalty checks are coming? Maybe, eventually. Here is what a Texas permit does and doesn't tell you, what to check next, and the payment rules Texas law sets once production starts, as summarized by the Railroad Commission of Texas (RRC).

What a drilling permit is, and isn't

A drilling permit (Form W-1) means an operator has applied for, or received, RRC approval to drill, re-enter or recomplete a well at a location. It doesn't mean a well will be drilled. The RRC's drilling permit FAQ says an operator has two years from the approval of its first filing to spud (start drilling) the well, after which the permit expires.

So a permit is a strong signal of intent, not a promise of production or payment.

First question: are your minerals leased?

Under Texas law, land ownership includes two estates: the surface and the minerals. They are often owned by different people. The RRC's guide to exploration and surface ownership explains that the mineral estate is dominant: the mineral owner, or a company that has leased from the mineral owner, may use the surface as reasonably necessary to explore for and produce oil and gas.

If you have a lease

Your lease is the contract that decides your royalty share, which deductions are allowed and what happens if your tract is pooled with others. Read it again now. Then check the permit records: the RRC's royalties FAQ notes that drilling permit records include plats and other documents designating the acreage in a pooled unit. If your tract sits inside the unit, the plat will usually show it.

If your minerals are unleased

Expect landmen to call. Don't sign anything quickly. Separately, some permits need an exception to the RRC's spacing or density rules (Statewide Rules 37 and 38). The RRC's drilling permit FAQ says notice of those exception applications goes to affected offset operators and unleased mineral interest owners, and if an owner can't be found, notice must be published in a local newspaper once a week for four consecutive weeks. If you get one of these notices, read it carefully and consider getting advice before the response deadline.

What to check next

  1. Find the permit in the RRC's Drilling Permit (W-1) Query. Note the operator, lease name, well number, API number, and whether it's vertical or horizontal.
  2. Open the plat. Is your tract in the drilling or pooled unit? Where is the bottom-hole location?
  3. Look up the operator. Does it already pay you on other wells? Is it the company that holds your lease?
  4. Watch for the spud and completion. After a well is completed and producing, the RRC's Production Data Query shows reported production. You will need the RRC identification number for the lease or well, which the RRC says must be posted at the entrance to the property.

Our guide on how to find drilling permits near your Texas mineral rights walks through the search tools step by step.

Once production starts: division orders and payment timing

The RRC is clear that it has no authority over lease and royalty matters, including leasing, payment of royalties and the right to receive them. But its royalties FAQ summarizes the payment rules in the Texas Natural Resources Code, Chapter 91. In short:

TopicThe rule, as summarized by the RRCSection
First paymentWithin 120 days after the end of the month of first sale.91.402(a)
Ongoing paymentsWithin 60 days after the end of the month oil was sold; 90 days for gas.91.402(a)
Small amountsPayment may wait until it reaches $100; if under $100 after 12 months but over $10, the total must be paid.91.402
Division ordersA payor may require a signed division order with certain contents before paying. A division order does not amend your lease.91.402(c)–(i)
Late paymentIf you notify the payor in writing that a payment is late, it must pay or respond in writing within 30 days.91.404(b)
InterestInterest is due on late payments in certain cases, at 2 percentage points above a published Federal Reserve rate (4 points if the payor didn't give notice that it is the new payor).91.403, 91.407(d)
Check stubsEach payment must report items such as the property, sales month, volume, price, taxes and deductions, and your decimal interest.91.502
Information requestsRequests by certified mail about itemized deductions, gas heating value or the RRC identification number must be answered within 60 days.91.504

Payments can be suspended without interest in some situations, such as a title dispute or an unresolved title requirement (91.402(b)). That is one reason to keep your title documents in order before a well comes online.

A few cautions

Get told when a permit is filed near you. Permit Watch — Texas is free. Pick your county, filter by survey, abstract, operator, lease or distance from your tract, and follow the county's RSS feed in any free reader app to get a phone or email alert when a new permit appears. Each permit links to the RRC's official record.

Not legal advice. This guide is general information, checked against the sources below on 11 October 2026. Rules change: confirm with the official source and a qualified professional before you act. Quickwell is not affiliated with the Railroad Commission of Texas.

Sources