Montana royalty payment law: late checks, stubs and interest

When the operator has to pay

Montana treats paying royalties as “of the essence” of an oil and gas lease, meaning it's a core part of the deal and not a side promise.^[1] The statute then sets two clocks. The first royalty is due within 120 days after oil or gas from the lease is first marketed. After that, oil royalties are due within 60 days and gas royalties within 90 days of the production being marketed.^[1]

Small owners won't always get a monthly check. When your royalties add up to less than $50 over six months, the operator can pay you twice a year, and when they add up to less than $10, it can pay once a year.^[1] If you have a tiny decimal in an older well, a long gap between checks may be perfectly legal.

Interest on late royalties

If the operator misses those deadlines, the unpaid royalty bears interest from the date it was due until it's paid. The rate is the maximum rate allowed under section 31-1-107.^[1] That section caps agreed interest at the greater of 15% a year or 6 percentage points over the bank prime rate the Federal Reserve publishes.^[2] So the interest isn't trivial, and it's worth asking for when a payment comes in months late.

There are two big exceptions. The interest rule doesn't apply if you've elected to take your share of production in kind, and it doesn't apply while there's a dispute over title to the minerals or who's entitled to the royalty, if the outcome would change who gets paid.^[1] That second one comes up a lot with inherited minerals. If your payments are held in suspense because an estate hasn't been sorted out, the clock usually isn't running in your favor, so clearing title quickly matters. Our guide to inherited minerals covers the paperwork side.

North Dakota handles the same problem differently. Its interest rule kicks in 150 days after production is marketed, as we explain in our guide to royalty check deductions. If you own on both sides of the state line, don't assume the same deadline applies to every well.

What your check stub has to show

Every Montana royalty payment made by check, draft or order has to come with a statement showing:^[3]

• Your name, the date of the payment and any owner number the producer uses for you.
• The months the production happened and any lease number.
• The type of product, and the barrels of oil and cubic feet of gas you're being paid on.
• The amount and type of every tax withheld.
• The net value of production and your net value.
• Contact information for questions about the payment.

On top of that, the producer has to list every charge assessed against you as its own line item at the time of payment.^[3] A producer that purposely and knowingly leaves this information off can be charged with a misdemeanor and fined up to $1,000.^[3] If your stub lumps deductions into one number, you're within your rights to ask for the breakdown.

Demanding an accounting

If you think you're owed money, start with a written demand. Under section 82-10-101 a royalty owner can make a written demand on whoever is obligated to pay for an accounting of what was produced and for the royalty that's due. If the payor doesn't give you the accounting and pay within 60 days, you can sue in district court in the county where the land sits.^[4] Owners paid by the same company on the same tract can join their claims in one lawsuit.^[4]

Be careful about the fee rule before you file. In an accounting suit the winner recovers reasonable attorney fees, and that cuts both ways. If the operator wins against you, the court awards its fees against you.^[4] Suits over the payment deadlines and interest are filed in the county where the well is, and the prevailing party gets court costs and reasonable attorney fees there too.^[1] Get the numbers straight before you go to court, and talk to a Montana lawyer if real money is involved.

Division orders in Montana

Montana defines a division order narrowly. It's an instrument the lessor signs to authorize the sale of production and direct how the proceeds are paid out.^[5] It has to be in writing, warrant the division of interest, list each owner's name, address and tax identification number, and require notice when ownership changes.^[5]

The most useful line for an owner is that a division order can't alter or amend your lease, and it doesn't relieve the lessee of any duty under the lease.^[5] If a division order includes terms that would change how you're paid under the lease, those terms don't override the lease. Our division order guide walks through checking the decimal itself.

Jim's take

Most late or short checks I see aren't anybody being crooked. They're a missed address change, an estate nobody's opened or a decimal that got keyed wrong. Call the owner relations number on the stub first and write down who you talked to. If that doesn't fix it, a written demand under 82-10-101 tends to get a faster answer than another phone call.

Jim Fort, Fort Union Minerals

A note on our interest

Fort Union buys minerals and royalty interests, so we have a commercial interest in this subject. Nothing in this guide depends on selling to us, and each statement comes from a public source listed below. Our editorial standards explain how we source and review our pages. If you ever want to know what we'd pay for your interest, the offer page is the way to reach us.

Sources

These are the sources behind this guide, in the order we first cite them. We read each of these sections in full on October 30, 2026.

1. MCA 82-10-103, Obligation to pay royalties as essence of contract, interest — Montana Legislature, Montana Code Annotated 2025, read October 30, 2026.
2. MCA 31-1-107, Interest rate allowed by agreement — Montana Legislature, Montana Code Annotated 2025, read October 30, 2026.
3. MCA 82-10-104, Payment of royalties, form of record required — Montana Legislature, Montana Code Annotated 2025, read October 30, 2026.
4. MCA 82-10-101, Action for accounting for royalty — Montana Legislature, Montana Code Annotated 2025, read October 30, 2026.
5. MCA 82-10-110, Division order, definition and effect — Montana Legislature, Montana Code Annotated 2025, read October 30, 2026.