The Texas General Land Office, through its Financial Management division, performs audits, limited reviews, and reconciliations on the oil and gas royalty data received by the state.
These audits ensure the royalty paid to the state accounts for all oil and gas produced on state lands, or lands in which the state has an interest, and is valued accurately in accordance with the lease agreements.
The Texas Natural Resources Code authorizes the Land Office to conduct these royalty audits, which include the right to inspect and examine books, accounts, reports, and other records relating to the payment of royalties, in-kind volume deliveries, and/or other consideration due to the state.
In addition, Federal legislation allows the U.S. Department of the Interior to delegate to the Land Office the right to conduct audits of federal lands in which the state of Texas shares in the resources.
House Bill 2571, 83rd Regular Session, effective September 1, 2013, amended §52.135 of the Texas Natural Resources Code regarding information requested pursuant to an audit.
Information related to the production, transportation, sale, and marketing of oil and gas from state lands are subject at any time to inspection and examination. The amendment authorizes the GLO to assess an administrative penalty against a lessee who fails to produce requested information in the time required or who withholds requested information, except in cases where a timely-filed explanation detailing a good faith legal basis for withholding has been provided.