In the past 36 months, Valor has recovered more than $27 million for mineral owners — almost all of it found by reading check stubs the way an auditor reads a tax return, line by line. Most owners glance at the net figure, confirm it cleared the bank, and file the stub away. That habit is expensive. The stub is the only document an operator gives you each month that ties production volumes, prices, taxes, and deductions back to your decimal interest, and every one of those fields is a place where money can quietly go missing. This post walks the stub from top to bottom so you know what each column should say, what it shouldn’t, and which lines deserve a second look before you cash the check.
Start at the Top: Property, Product, and Decimal Interest
Before any dollars appear, the stub identifies the property (lease name, well name, or property number), the product (oil, gas, NGLs, condensate, plant products), the production month, and your decimal interest. The decimal is the single most important number on the page — it determines every dollar that follows.
Pull your division order and confirm the decimal on the stub matches what you signed. A transposed digit (0.00125000 vs. 0.00012500) is a 10x error that compounds every month until you catch it. If you own across multiple wells in multiple states — Valor manages mineral interests across 32 states and 13 major basins — you should be reconciling decimals well by well, not in aggregate.
Also confirm the product type. Gas wells frequently produce condensate and plant products (ethane, propane, butane, natural gasoline) that show up on separate lines with separate prices and separate deduction structures. Missing lines are common when a new product stream comes online mid-year.
Gross Value: Volume, Price, and Decimal Interest
Gross value is the math the operator did before taking anything out. Three inputs drive it: the volume attributed to your interest (BBL for oil, MCF or MMBtu for gas), the price per unit, and your decimal interest. The stub should show all three.
Check the price against the posted price for that month and that basin. Permian WTI, Midland-Cushing differential, and Waha gas pricing all move independently, and a stub that shows a price meaningfully below the regional benchmark is worth a question. For gas, watch whether the price is quoted per MCF or per MMBtu — the BTU adjustment can swing your gross by 5-15% depending on the gas stream.
Volumes should reconcile to what the operator reports to the state regulator. Texas Railroad Commission production reports and Oklahoma Corporation Commission filings are public. If your stub shows materially less volume than the regulator filings for the same month, the difference needs an explanation. Our mineral management team runs this reconciliation as standard practice across every property under management.
Severance Tax: Predictable, but Worth Verifying
Severance tax is the state’s cut for the privilege of producing minerals. In Texas, the base production tax rate is 4.6% of market value for crude oil and condensate, and 7.5% of market value for natural gas. Certain fees, exemptions, credits, or reduced tax rates may also apply depending on the well, product type, and qualification status, so the severance tax line is worth spot-checking instead of assuming it is always standard.
In Oklahoma, gross production tax rules can vary depending on the well type, production period, and applicable incentives or exemptions. While oil and gas are commonly subject to a 7% gross production tax rate, owners should verify the rate shown on their stub against current state rules or ask the operator for support.
Two things to watch. First, severance should be calculated on gross value before deductions, not on net. Operators occasionally calculate it on a reduced base, which understates the tax line and can mask other accounting choices upstream. Second, some wells qualify for severance tax reductions or exemptions (high-cost gas, enhanced recovery, marginal wells). If your stub shows a reduced severance rate, you want to know why — because when the exemption expires, your net will drop without anything else changing.
Post-Production Deductions: Where Most Underpayments Live
This is the section that pays for our audit work. Post-production deductions cover the cost of moving and conditioning the product between the wellhead and the point of sale: gathering, compression, dehydration, treating, processing, and transportation. They appear as separate line items or rolled into a single “deducts” figure, and whether they’re allowed at all depends on your lease language.
Three questions to ask on every stub:
- Does your lease permit post-production deductions, or does it have a “no deductions” or “market enhancement” clause that should zero this column out?
- Are the deductions proportional to gross — or has the deduction percentage crept up over time without a corresponding change in the gathering or processing arrangement?
- Are you being charged for services on products that aren’t yours? NGL processing costs sometimes get allocated against residue gas owners who never received the NGL revenue.
A 15% deduction load on a $5,000 monthly check is $750 a month — $9,000 a year per well. Multiplied across a portfolio, this is the line item that has driven the bulk of the $27 million Valor has recovered. Our team — CPAs, CPLs, and CMMs — reviews lease language against actual deduction practice as part of standard mineral management. You can meet the people who do that work on our team page.
Net Payment, Prior-Period Adjustments, and Suspense
Net payment is what remains after your share of gross value is reduced by severance taxes, post-production deductions, and any adjustments. On many royalty statements, the decimal interest has already been applied by the time you see the gross value column, so avoid applying it twice when checking the math. Once you calculate the expected net amount, compare it to the deposit in your account. If the numbers do not match, the difference usually appears in one of two places: prior-period adjustments or suspense.
Prior-period adjustments (sometimes labeled PPA, “corrections,” or “prior month”) are operator-initiated changes to past production months. They can be legitimate — a delayed meter reading, a price true-up, a tax refund — or they can be a quiet way to reverse income recognized in a prior year. Either way, every PPA line should be explainable. Ask for the underlying detail if it isn’t.
Suspense is money the operator is holding rather than paying you. Common reasons include unsigned division orders, title questions, address changes, or amounts below the operator’s minimum check threshold (often $25 or $100). Suspended funds belong to you and should be released as soon as the underlying issue is resolved. If you have a stub showing suspense for more than two consecutive months without movement, that’s a phone call.
If reviewing every stub, every month, across every well isn’t realistic for your portfolio, that’s the work we do. Valor manages more than 500,000 wells across 32 states under a SOC 1 Type II–certified process, and we’ve put $27 million back into mineral owners’ pockets doing exactly this kind of line-by-line review. See how it works on our Mineral Management overview.
Contact Valor Today
Need help understanding what your royalty check stub is really telling you? Contact us today to see how our mineral management solutions can help you organize records, verify payments, monitor deductions, and manage mineral assets with greater clarity and control.
The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.
