August 24, 2026

Incorrys Inc. performed assessment of lease oil and gas royalties across North America. ease oil and gas royalties are payments made by an oil and gas producer to the owner of the mineral rights under an oil and gas lease. They are usually calculated as a percentage of the value of oil and gas produced and sold. For example, if a lease has a 20% royalty, the mineral owner receives 20% of the production revenue, while the producer retains the remaining 80% before other costs and obligations. In general, royalties are calculated in such a way as to ensure profitability for producers. If royalties are too high, producers will have less incentive to develop oil and gas resources and may move capital to another basin or area. Oil and gas royalty rate are constantly changing to ensure that the rates correspond with market conditions, including productivity and commodity prices.

Figure 1-2: Oil Royalties Lease

Figure 3-4: Oil Royalties Lease

The charts compare estimated oil and natural gas lease royalty rates across major U.S. producing jurisdictions and the Western Canadian Sedimentary Basin (WCSB). Ad valorem taxes are not included. The royalty rates shown generally apply to public lands, although private mineral rights owners typically charge comparable royalty rates. In some jurisdictions, such as California and Ohio, severance taxes are assessed on a dollar-per-unit-of-production basis. In these cases, the severance tax was converted to a percentage using the average 2025 WTI oil price of $64.94/Bbl and the average 2025 Henry Hub natural gas price of $3.52/Mcf.

Among the U.S. jurisdictions reviewed, New Mexico has the highest estimated royalty rate at 25%, followed by Texas at 22.5%. Several jurisdictions, including Colorado and West Virginia, have rates of around 20%, while Oklahoma and Ohio are at the lower end of the comparison, at approximately 12.5%.

Oil and natural gas royalty rates are generally the same within the U.S. jurisdictions considered because state oil and gas leases typically establish a common royalty rate for both commodities. Western Canada differs, with the weighted-average WCSB royalty estimated at approximately 16% for oil and 11% for natural gas. WCSB royalties are calculated using complex formulas; therefore, the rates shown are estimated based on the effective royalties paid by major producers.

For more information about royalties and references please visit:

California:
“Information on State Tidelands Oil and Gas Leases | CA State Lands Commission.” Ca.Gov, 2026, https://www.slc.ca.gov/oil-gas/leases/lease-information/. Accessed 21 Aug. 2026.

Colorado:
Oil and Gas Lease Terms and Royalty Rate Revisions COLORADO STATE LAND BOARD Oil and Gas Lease Terms and Royalty Rate Revisions. 2016, https://www.statetrustland.org/uploads/1/2/0/9/120909261/oil_and_gas_lease_terms_and_royalty_rate_revisions.pdf. Accessed 21 Aug. 2026.

Louisiana

“Louisiana Laws – Louisiana State Legislature.” Www.Legis.La.Gov, https://www.legis.la.gov/legis/Law.aspx?d=86943&utm. Accessed 21 Aug. 2026.

Mississippi

“School Trust Lands: Policies and Procedures Manual.” Mississippi Secretary of State, Aug. 2017. https://www.sos.ms.gov/sites/default/files/public-lands/Lands%20Handbook_2020.pdf . Accessed 21 Aug. 2026.

“BLM Announces March 2024 Oil and Gas Lease Sale in Mississippi | Bureau of Land Management.” Bureau of Land Management, 26 Jan. 2024, https://www.blm.gov/press-release/blm-announces-march-2024-oil-and-gas-lease-sale-mississippi. Accessed 21 Aug. 2026.

Montana

“Oil and Gas Lease (DS-423).” Montana Department of Natural Resources and Conservation, amended Jan. 11, 2024. https://dnrc.mt.gov/TrustLand/subsurface-resources/Forms/DS-423.OGLeaseFRM20240111.Sample.pdf . Accessed 21 Aug. 2026.

New Mexico

“N.M. State Land Office Earns Over a Quarter of a Billion Dollars in Single Oil and Gas Lease Sale with 25% Royalty Rate Championed by Commissioner Garcia Richard | NM State Land Office.” Nmstatelands.Org, 2026, https://www.nmstatelands.org/2025/08/19/n-m-state-land-office-earns-over-a-quarter-of-a-billion-dollars-in-single-oil-and-gas-lease-sale-with-25-royalty-rate-championed-by-commissioner-garcia-richard/. Accessed 21 Aug. 2026.

North Dakota

“NDDTL Oil & Gas Lease Auction.” North Dakota Department of Trust Lands, Mar. 17–24, 2026. https://www.land.nd.gov/sites/www/files/documents/Minerals/News/032026%20Oil%20%26%20Gas%20Lease%20Auction%20Land%20Unit%20List%20v1.pdf . Accessed 21 Aug.

Ohio

“Chapter 5749 – Ohio Revised Code | Ohio Laws.” Ohio.Gov, 2017, https://codes.ohio.gov/ohio-revised-code/chapter-5749. Accessed 21 Aug. 2026.

“Comments of the Ohio Department of Natural Resources Re: Notice of Nomination 26-DNR-0003, Salt Fork State Park and Wildlife Area.” Ohio Department of Natural Resources, Mar. 13, 2026. https://dam.assets.ohio.gov/image/upload/odnr/oil-gas/lmc/nominations/26-DNR-0003-ODNRComments.pdf . Accessed 21 Aug. 2026.

Oklahoma

“Oklahoma Statutes: Title 64. Public Lands.” Oklahoma State Senate, 2022. https://oksenate.gov/sites/default/files/2022-05/os64.pdf . Accessed 21 Aug. 2026.

Pennsylvania

“Agenda: Pennsylvania Game Commission Meeting, January 25, 2025.” Pennsylvania Game Commission, Jan. 25, 2025. https://www.pa.gov/content/dam/copapwp-pagov/en/pgc/documents/about-us/mediareportssurveys/documents/january%2025%202025%20draft%20agenda.pdf . Accessed 21 Aug. 2026.

“An Examination of Pennsylvania’s Oil and Gas Industry.” The Center for Rural Pennsylvania, Mar. 2005. https://www.rural.pa.gov/download.cfm?file=Resources%2Freports%2Fassets%2F205%2FOil_Gas_Industry.pdf . Accessed 21 Aug. 2026.

NON-Surface Disturbance OIL and GAS Lease for State Forest and PARK Lands. https://elibrary.dcnr.pa.gov/PDFProvider.ashx?PromptToSave=False&Size=420871&ViewerMode=2&action=PDFStream&chksum=&docID=1742126&docName=C_Non-SurfaceDisturbanceOGLease-SForest-ParkLands&nativeExt=pdf&overlay=0&revision=0. Accessed 21 Aug. 2026.

Texas

“Paid-Up Oil and Gas Lease No. MF121405.” Texas General Land Office, Aug. 22, 2023. https://cdn.glo.texas.gov/ncu/SCANDOCS/archives_webfiles/arcmaps/webfiles/landgrants/PDFs/1/1/5/4/1154411.pdf . Accessed 21 Aug. 2026.

Utah

“Utah Code Section 59-5-102.” Utah.Gov, 2026, https://le.utah.gov/xcode/Title59/Chapter5/59-5-S102.html. Accessed 21 Aug. 2026.

“Fiscal Year 2019 Annual Report.” State of Utah School and Institutional Trust Lands Administration, 2019. https://trustlands.utah.gov/wp-content/uploads/2019/11/SITLA-FY2019-Annual-Report-WEB.pdf . Accessed 21 Aug. 2026.

West Virginia

“WV Mineral Development – About the Process.” Wvmineraldevelopment.Org, 2023, https://wvmineraldevelopment.org/about-the-process. Accessed 21 Aug. 2026.

Wyoming

Office. “Office of State Lands and Investments – Auction Information.” Wyo.Gov, 2025, https://lands.wyo.gov/trust-land-management/mineral-leasing/oil-gas-leases/auction-information. Accessed 21 Aug. 2026.

Private Land

“Oil, Gas, and Coal Royalties: Raising Federal Rates Could Decrease Production on Federal Lands but Increase Federal Revenue.” U.S. Government Accountability Office, June 20, 2017. https://www.gao.gov/assets/gao-17-540.pdf. Accessed 21 Aug. 2026.

Federal Land

“Programs: Energy and Minerals: Oil and Gas: Leasing: General Leasing | Bureau of Land Management.” Www.Blm.Gov, https://www.blm.gov/programs/energy-and-minerals/oil-and-gas/leasing/general-leasing. Accessed 21 Aug. 2026.