Change of language on division order

Division Orders
1

We received a division order and amended it as it went against our lease terms. Though we provided documentation, the operator didn’t accept change and sent a new DO to sign. Our lawyer suggested not fighting this term, and we agreed as it probably wouldn’t effect our royalties.

However, the second DO has additional language under the Terms of Sale section. It used to say simply, “payor shall pay all parties in accordance with terms of the oil and gas lease”. Now it says:

“The undersigned will be paid in accordance with the division of interest set out above. The payor shall pay all parties at the price agreed to by the operator for oil to be sold pursuant to this division order. Purchaser shall compute quantity and make corrections for gravity and temperature and make deductions for impurities”.

Our lawyer said this is standard legal Texas language, but the language is different and not sure why it changed.

Thanks for any additional opinions!

2

Which state? If you are in Oklahoma you are not required to sign any division order.

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3

Texas division order language is 91.402 of Natural Resources Code - see link below. The DO should include statement in all capitals “THIS AGREEMENT DOES NOT AMEND ANY LEASE OR OPERATING AGREEMENT BETWEEN THE INTEREST OWNERS AND THE LESSEE OR OPERATOR OR ANY OTHER CONTRACTS FOR THE PURCHASE OF OIL OR GAS.” If not, then you should insert. NATURAL RESOURCES CODE CHAPTER 91. PROVISIONS GENERALLY APPLICABLE

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Yes the DO includes this language, which I guess is the most important line. Thank you for your response.