Division Order

A division order is a document that identifies all owners of interest in a producing oil or gas well or lease and specifies each owner's decimal share of production revenue. It provides the basis for the purchaser or operator to distribute payments correctly.

Contents of a division order: - Well or lease identification - Names of all interest owners (royalty, working interest, ORRI, etc.) - Decimal interest for each owner - Payment instructions - Legal description of the property

Purpose: - Establishes the mathematical basis for distributing production revenue - Provides the operator or purchaser with payment instructions - Creates a record of all parties entitled to revenue - Serves as authorization for the purchaser to make payments

Preparation: - Title attorney or landman examines the chain of title - All mineral interests, royalties, and overrides are calculated - Decimal interests are computed for each owner - Division order is circulated for owner signatures

Legal significance: - Division order laws vary by state - Some states limit the binding effect of division orders - Division orders do not convey title or change ownership - Errors in division orders can result in improper payment distribution

Division order title opinion: Before preparing a division order, an attorney typically renders a title opinion examining: - Current ownership of all interests - Proper conveyance of all transfers - Outstanding title defects or curative requirements - Correct decimal interest calculations