Who owns UT’s oil land—and who gets to spend the money?

UT’s oil royalties become permanent investment capital. Austin receives a governed allocation after system distributions and debt service.

By Sulayman Bowles · 11 minute read

Research cutoff: 2026-10-30. Prices, budgets and results keep their own dates.

In this investigation

The State of Texas holds the oil land for the Permanent University Fund. Private companies hold mineral leases. UT Austin receives money from the investment fund, but it can’t spend the oil royalties as they arrive.

The biggest recent change was a board decision. The regents raised the default payout to 7% of a five-year average investment value in May 2025. The next annual distribution rose 46%; Austin’s initial allocation rose about 2%. Oil production supplies the money. Law and annual allocation decisions determine how much reaches campus. [4][5]

The land, the lease and the company on the well

University Lands manages about 2.1 million surface acres in 19 West Texas counties. A company can own a mineral lease without owning the public estate, and a well’s operator need not own every interest in its production. UTIMCO manages the invested proceeds. [1][10]

Five producers—Diamondback, Continental, ExxonMobil, ConocoPhillips and Sequitur—accounted for about half of fiscal 2025 production. The annual report doesn’t give their individual shares. The next ten producers supplied about 40%. The GIS lists 9,880 producing API well identifiers and 222 operator names; subsidiaries and older names prevent treating those as 222 ultimate corporate owners. Some rights overlap by depth. [10][12]

The public companies’ shareholders, Continental’s Hamm-family owners and Sequitur’s private investors occupy another level above the leases. Sequitur’s complete current percentages weren’t found. The workbook keeps those gaps visible. [11]

One Hibernia lease, effective in October 2023, required a 25% gross royalty without production or post-production deductions. The portfolio average in fiscal 2025 was 21.25%. Neither proves the public received unusually generous or cheap terms: geology, depth, bonuses, deductions and development requirements would need to match the private leases used for comparison. [1][10][13]

Land ownership, leases and operating rights

Position	What it controls or receives
State / public PUF estate	The dedicated land and property and contractual rights
UT Board of Regents	Fiduciary and governing responsibility for the fund
University Lands and statutory leasing authorities	Administration and leasing of the estate
Private lessees and working-interest owners	Defined mineral property interests, development rights and associated obligations
Well operator	Day-to-day production; it need not own every working interest
UTIMCO	Management of the financial investment portfolio
Eligible institutions	Legally defined capital or operating benefits

A sold barrel has to become permanent capital

In 1926, the Texas Supreme Court stopped the legislature from spending about $1.595 million of mineral receipts through an available building fund. Removing oil disposed of part of the endowment’s capital; the payment had to replace it in the permanent fund. The 1999 total-return amendment later allowed distributions from more than interest and dividends. [3][7][15]

That explains today’s route. Mineral receipts enter the PUF. A governed investment payout and net surface income enter the Available University Fund, or AUF. Two-thirds of the divisible AUF goes to UT System and one-third to A&M System. Debt service comes before the permitted operating allocations. Some surface income, including pipelines and water-related activity, also depends on oil development. [2][7][10]

The familiar Santa Rita discovery in 1923 changed the land’s commercial prospects. It doesn’t supply a full account of earlier ownership or Indigenous dispossession. The federal Morrill land-grant history and Texas’s state-created PUF grants need their own parcel histories. [14][16]

Twelve years of accounts show two engines of growth

Between September 2013 and August 2025, the financial PUF grew from $14.853 billion to $40.291 billion. New mineral contributions were $14.504 billion; investment income and gains were $24.548 billion before the reported administration and distribution deductions shown below. Earlier oil receipts financed later investment returns, so assigning a clean percentage of that growth to oil versus markets would mislead. [17]

Fiscal 2022 shows the risk. Mineral receipts were $2.125 billion, but financial results after expenses were about negative $2.043 billion. After the $1.162 billion payout, the fund shrank about $1.081 billion. An oil boom doesn’t guarantee a growing endowment. [18]

For fiscal 2025, UT System had $1,174.366 million available after its share of the divisible fund and interest. It used $396.044 million for debt service, $136.397 million for campus support through system activities, $61.015 million for system administration, $70 million for system initiatives and $524.967 million for Austin programs and Austin-managed technology. Uses exceeded that year’s resources by $14.057 million, funded from balances. These transfers aren’t all same-year campus spending. [5]

Twelve audited years

Financial PUF bridge, September 2013–August 2025	Nominal $ billions
Opening financial net assets	14.853
New mineral contributions	+14.504
Investment income and gains, net of reported investment expenses	+24.548
Land administration and other reported administrative expenses	−0.247
Investment distributions to the AUF	−13.366
Closing financial net assets	40.291

The fiscal 2025 distribution

Stage	$ millions
Investment payout from PUF	1,524.925
Surface and other income, less divisible expenses	+141.145
Net divisible AUF	1,666.070
A&M System’s one-third	555.357
UT System’s two-thirds	1,110.713
Interest on UT’s AUF balances	+63.653
UT resources available	1,174.366

A larger payout doesn’t dictate Austin’s allocation

The current default is 7% of the previous twenty quarterly investment values ending in February. It isn’t 7% of all land and financial wealth. Constitutional limits apply, including a purchasing-power test; debt service has priority. [2][4]

The investment payout rose from the audited $1.525 billion in fiscal 2025 to approved amounts of $2.230 billion for 2026 and $2.451 billion for 2027. Austin’s initial financing allocation moved from $524.967 million to $535.967 million, then to $640.675 million for fiscal 2027. The system’s December 2025 plan also reserved $390.458 million for later board decisions. A reservation wasn’t proof that the money had already been spent or permanently withheld. [5][20][21][23]

The 2027 payout uses an averaged base of about $35.0 billion. Against the preliminary August 2026 investment value of $45.904 billion, it equals about 5.34%. The two percentages use different bases. [21][22]

The payout decision and the campus allocation

Fiscal year	Investment distribution	Basis
2025	$1.525 billion	Audited distribution
2026	$2.230 billion	Approved May 2025
2027	$2.451 billion	Approved May 2026

What the campus money buys

Austin reported $498.677 million of AUF spending in fiscal 2025. The table below groups its uses. Facilities, safety, IT, finance and the provost sit inside the large institutional category; it isn’t an executive-pay total. The Texas Advance Commitment line is one aid source, not all scholarships, fellowships or assistantships. [5]

The approved fiscal 2027 budget assigns $640.675 million to AUF financing: $586.975 million for operations, $20 million for Dell, $17 million for Texas Advance Commitment, $5 million for Civic Leadership and $11.7 million across security, crisis support, research cyberinfrastructure and IT. It is 12.3% of the $5.227 billion all-funds expenditure subtotal before reconciling adjustments. Those are spending plans. They don’t trace a particular barrel to a professor’s paycheck. [23]

Austin’s reported spending

Austin fiscal 2025 reported application, grouped for readability	$ millions
Instruction, research and public-service categories	173.080
Faculty recruitment, undergraduate outreach/support and graduate support	87.357
Institutional accountability and public connections	173.682
Dell Medical School	46.653
School of Civic Leadership	2.856
Texas Advance Commitment	6.006
System technology	9.043
Total	498.677

Which universities benefit?

Austin, the eligible A&M university group and Prairie View receive direct operating support as well as capital access. Other eligible institutions receive capital support without the same operating entitlement. The joined general-academic list has 37 reporting entries, fifteen with PUF capital eligibility; health institutions and agencies require their own treatment. [2][24]

Institutional history can matter more than system membership. SFA’s 2023 successor law expressly granted PUF participation. A&M–Victoria, which joined A&M in 2025, remains on the Higher Education Fund side with a statutory annual allocation of $6.030 million. [25][26]

The per-student comparison below divides direct fiscal 2025 AUF use by consistently grouped Fall 2024 headcounts. It shows scale, not money handed to students or an educational-benefit ranking. Research and medical spending enter the totals. Capital borrowing and debt service need different treatment to avoid counting the same financing twice. A university without direct operating entitlement can still benefit from system aid and services, and other public funds. [5][24][27][28]

Universities eligible for PUF support

Access	Institutions
Direct operating support and capital access	UT Austin; Texas A&M’s university group, including Galveston and the Health Science Center; Prairie View A&M. The two system administrations also have operating eligibility.
Capital access without the same direct university operating entitlement	Other eligible UT institutions; Tarleton, A&M–Central Texas, A&M–San Antonio and eligible A&M agencies
Outside PUF eligibility	Other public-university systems and specified regional A&M institutions, which can have other state funding entitlements

Fiscal 2025 direct support per student

University group	Reported direct AUF use	Comparison headcount	Dollars per fall student
UT Austin, including Dell	$498.677m	53,864	$9,258
Texas A&M, including HSC and Galveston	$314.093m	76,530	$4,104
Prairie View A&M	$34.413m	9,821	$3,504

A $10 oil-price fall doesn’t cut this year’s campus budget dollar for dollar

At fiscal 2025’s 20.120 million net royalty barrels, a one-year $10 price reduction means $201.2 million less royalty value if volume and everything else stay fixed. If that shortfall appears in four of the twenty quarterly investment values, the formula lowers the annual payout across both systems by $2.817 million. If it appears in all twenty, the reduction is $14.084 million. UT System’s two-thirds amounts are $1.878 million and $9.389 million. Austin’s allocation is another decision. [4][10]

This is a sensitivity, not a forecast. It holds gas, NGLs, bonuses, surface income, investment results and production fixed. A recurring royalty loss would accumulate. Averaging buffers a short shock; it doesn’t make the university independent of oil or financial markets.

The remaining land has a value too

The $40.291 billion fiscal 2025 investment balance excludes PUF land. UT System valued the remaining mineral and surface estate at $10.632 billion, up from $10.391 billion in 2024. The model uses reserve estimates, commodity prices, royalty cash flows discounted at 10% and surface values. Its assumptions are uncertain; that increase alone doesn’t show how depletion, new drilling and prices each contributed. [29][30]

The financial purchasing-power test counts mineral receipts as new capital without simultaneously revaluing the remaining minerals. The 2026 approval’s 6.68% reported real growth included 4.65 percentage points from mineral receipts. That doesn’t prove an accounting error or constitutional breach. It explains why a longer view of public wealth would examine the investments and the remaining estate together. Neither land value nor the investment balance is cash Austin can appropriate freely. [21]

How we got this

The October 30, 2026 investigation joins audited fund accounts, regents’ decisions, lease and well data, and campus budgets. Fiscal years end August 31. Audited results, approved spending and preliminary investment values keep their own dates. Full methods, the literature trail and remaining gaps are in the source manuscript and workbook.

Earlier explanations and remaining questions

Existing work	What it shows	What needs another layer
UT System explainers and its 2015 issue brief	Mineral receipts versus surface receipts; the PUF/AUF distinction; debt and operating restrictions	Current payout policy, reconciled annual flows and campus spending
Texas Tribune/Reveal, 2017	The money trail and the competition between system administration and student benefits	A current reconstruction using accounts on consistent bases
Historical and constitutional scholarship	The grants, A&M’s claim, the split and changing eligibility	How those inherited rights operate across today’s institutions
University Lands’ reports and public maps	Production tiers, leases, wells and contract terms	A reproducible extract, with subsidiaries, overlapping rights and missing fields kept visible