August 21, 2026
Figure 1. Oil Royalty Lease and Severance Tax
Figure 2. Gas Royalty Lease and Severance Tax
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 royalties apply for the public land, but private mineral rights owners usually charge compatible royalties. In some jurisdictions, such as California and Ohio, severance taxes are calculated based on dollars per unit of production. In such cases, the severance tax was converted to a percentage based on the average 2025 WTI oil price of $64.94/Bbl and 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, are around 20%, while Oklahoma and Ohio are at the lower end of the comparison at approximately 12.5%.
Oil and 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. WCBS royalties are calculated using a complex formula and estimated based on the effective amount paid by all major producers.
See Also:
North American Natural Gas Breakeven Cost by Basin
Crude Oil Full Cycle Cost Components
References:
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.
“Severance Tax | Colorado General Assembly.” Colorado.Gov, 2026, https://content.leg.colorado.gov/agencies/legislative-council-staff/severance-tax. Accessed 21 Aug. 2026.
Louisiana
“What Is the Severance Tax Rate for Oil and Condensate?, Louisiana Department of Revenue.” Louisiana.Gov, 2025, https://revenue.louisiana.gov/tax-education-and-faqs/faqs/severance-taxes/what-is-the-severance-tax-rate-for-oil-and-condensate/. Accessed 21 Aug. 2026.
“Louisiana Laws – Louisiana State Legislature.” Www.Legis.La.Gov, https://www.legis.la.gov/legis/Law.aspx. Accessed 21 Aug. 2026.
“Revenue Information Bulletin No. 26-013: Natural Gas Severance Tax Rate Effective July 1, 2026, through June 30, 2027.” Louisiana.Gov, June 2, 2026. https://dam.ldr.la.gov/lawspolicies/Natural%20Gas%20Tax%20Rate%20July%202026%20June%202027%20RIB.vFINAL.pdf. Accessed 21 Aug. 2026.
Mississippi
“2025 Mississippi Code 1972 :: Title 27 – Taxation and Finance (Chs. 1 – 117) :: Chapter 25 – Severance Taxes (Arts. 1 – 7) :: Article 5 – Oil Severed or Produced in State (§§ 27-25-501 – 27-25-525) :: § 27-25-503. Privilege Tax Levied; Exemptions [Paragraph (1)(c) Repealed Effective July 1, 2028].” Justia Law, 2025, https://law.justia.com/codes/mississippi/title-27/chapter-25/article-5/section-27-25-503/. Accessed 21 Aug. 2026.
“2025 Mississippi Code 1972 :: Title 27 – Taxation and Finance (Chs. 1 – 117) :: Chapter 25 – Severance Taxes (Arts. 1 – 7) :: Article 7 – Natural Gas Severed or Produced in State (§§ 27-25-701 – 27-25-723) :: § 27-25-703. Privilege Tax Levied; Exemptions [Paragraph (1)(B) Repealed Effective July 1, 2028].” Justia Law, 2025, https://law.justia.com/codes/mississippi/title-27/chapter-25/article-7/section-27-25-703/. Accessed 21 Aug. 2026.
“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.
“Oil and Natural Gas Production Tax.” Mt.Gov, 2025, https://revenue.mt.gov/taxes/natural-resource-taxes/oil-and-natural-gas-production. Accessed 21 Aug. 2026.
New Mexico
“2025 New Mexico Statutes :: Chapter 7 – Taxation :: Article 29 – Oil and Gas Severance Tax :: Section 7-29-4 – Oil and Gas Severance Tax Imposed; Collection; Interest Owner’s Liability to State; Indian Liability..” Justia Law, 2025, https://law.justia.com/codes/new-mexico/chapter-7/article-29/section-7-29-4/. Accessed 21 Aug. 2026.
“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.
“Oil and Gas Severance Tax.” North Dakota Office of State Tax Commissioner, https://www.tax.nd.gov/business/oil-and-gas-severance-tax. Accessed 21 Aug. 2026.
“Gas Tax Rate Notice: Notification of Gas Tax Rate for Fiscal Year 2027.” North Dakota Office of State Tax Commissioner, June 1, 2026. https://www.tax.nd.gov/sites/default/files/documents/newsletters/oil-gas/gas-tax-rate-notice.pdf . Accessed 21 Aug. 2026.
“Gas Tax Rate Table.” North Dakota Office of State Tax Commissioner, 2016, https://www.tax.nd.gov/gas-tax-rate-table. Accessed 21 Aug. 2026.
“Oil and Gas Severance Tax.” North Dakota Office of State Tax Commissioner, 2023, https://www.tax.nd.gov/excise-special-and-other-taxes/oil-and-gas-severance-tax. Accessed 21 Aug. 2026.
Ohio
“2006 Ohio Revised Code – 5749.02. Natural Resources Severance Tax; Additional Coal Taxes..” Justia Law, 2025, https://law.justia.com/codes/ohio/2006/orc/jd_574902-653f.html. Accessed 21 Aug. 2026.
“Severance Tax.” Ohio Department of Taxation, 2015 Annual Report, 2015. https://dam.assets.ohio.gov/image/upload/tax.ohio.gov/communications/publications/annual_reports/2015_annual_report/2015_AR_Section_2_Severance_Tax.pdf . Accessed 21 Aug. 2026.
“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.
“2025 Oklahoma Statutes :: Title 68. Revenue and Taxation :: §68-1001. Gross Production Tax on Asphalt, Ores, Oil and Gas, and Royalty Interests – Exemptions..” Justia Law, 2025, https://law.justia.com/codes/oklahoma/title-68/section-68-1001/. 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
“Crude Oil Production Tax.” Comptroller.Texas.Gov, https://comptroller.texas.gov/taxes/crude-oil/. Accessed 21 Aug. 2026.
Texas Comptroller of Public Accounts. “Natural Gas Production Tax.” Texas.Gov, 2015, https://comptroller.texas.gov/taxes/natural-gas/. Accessed 21 Aug. 2026.
“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
“West Virginia State Tax Overview: Calendar Year 2026.” West Virginia State Tax Department, 2026. https://tax.wv.gov/Documents/Research/WestVirginiaStateTaxOverview.pdf. Accessed 21 Aug. 2026.
“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.
“House Bill No. HB0120: Energy Product Reclassification and Sovereignty Act.” Wyoming Legislature, 2026. https://wyoleg.gov/2026/Engross/HB0120.pdf. 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.