Division Orders and wishful thinking

To all of you that have been through the experience of receiving division orders, would you please share with those of us who are leased but haven't been through that process? What does it require paperwork wise? What kind of documents do you have to send in? Or do they only look at documents that have been filed with the county clerk's office? I inherited minerals from my mother who passed away in 2009. Filed an heirship affidavit just this year. This is all new to me...Just leased with Continental for 34- 8N-6W. They have pooling hearing & application for multi-unit well with OCC in process. Maybe I am putting the cart before the horse, but just want to be sure I am prepared.

Also have tried to upload a photo to my profile but have been unable to get it to work so far. Any tips?

Pat How was it transferred to you?

I assume it was transferred by my mother's passing. She did have a will leaving everything to her two children but I was told by an attorney that it didn't need to be probated because she didn't own any real estate and all her accounts were titled as transfer on death. I know it sounds crazy but at the time of her death, I didn't realize the mineral rights were an asset that needed probate. My mother was an only child and inherited these mineral rights from her parents. So, I just filed an affidavit with the county clerk's office listing heirship. The papers I have (wills, affidavits, etc.) clearly spell out the heirship.

The County records online go back to 92. I found no record of a transfer from your Grandad to your mom or from your mom to you. The affidavit of ownership just shows you are claiming an interest and the oil company will take a lease with that. But you will have to show that you have marketable title before they will start paying you. Do you want the name of a lawyer in Chickasha who can tell you what you need and what it will cost? Or you can wait for the division order and they will tell you what you need and then you can call a lawyer.

Pat,

For a profile pic go to settings in upper right of this page, click browse and find the folder where you keep your photos, click on the one you want (might have to click open) and it should load into the little preview box. Scroll down and click save.

Thanks, Pat. A lot of us are kind of confused by these division orders. Look forward to the tutorial.

We went to Chickasha from Lindsay on Hiway 19 today and there were three or four drilling rigs and about 3 completion rigs on boths sides of the hiway within eye shot after we crossed over into Grady County. There are tanks in nearly every pasture from the activity that has gone on for years. Guess these new wells are going to another depth. Anyone on here have royalty in any of them old or new???

I found this explanation online. It helped me understand the procedure:

Division Orders have long been used as a means of identifying ownership and documenting the payment of royalty on sales of oil and/or gas by the purchaser of production, or the operator of the properties.

The Division Order acts as a stipulation as to the ownership of each party owning an interest in production from a well or wells.

Over the last twenty to thirty years, Division Orders have changed in that many state statutes now limit what may be included in a Division Order, and their effect.

The basic provisions of a Division Order are:

1. The identification of the owner of an interest and a statement of the owner’s interest. By signing the Division Order, the owner certifies that the decimal interest in production identified in the Division Order, or the proceeds of that production, are to be paid to the owner by the issuer of the Division Order.

2. Division Orders typically provide that the owner will notify the issue of the Division Order, in writing, of any change in ownership or change in the interest owned, and that the changes will be effective on the first day of the month following receipt of the notice, or thirty (30) days after that time.

3. Division Orders typically authorize the company making payments to withhold payments in the event of any title dispute or adverse claim to the interest of the owner, and for the owner to agree to reimburse the company on any amounts attributable to an interest to which the owner is not entitled.

4. Division Orders typically include a provision that provide that the company making payment for production may accrue proceeds until the total amount reaches a certain amount, or until the end of the year, whichever occurs first, subject to any requirements by applicable state statute.

5. Most Division Orders now include the provision that its terms do not amend any oil and gas lease or operating agreement that has been entered into by the owner. If the Division Order does not provide this, it is provided for by statute in many states.

In that the owner will be receiving payments from the company issuing the Division Order, a social security number, in addition to a signature and current address is usually required. The Division Order typically provides that if a social security number is not provided that the company may withhold up to thirty-one percent (31%) (or whatever Congress determines to be that statutory withholding rate) to be paid as taxes, which amounts are not refundable to the owner.

On oil production, a Division Order may be issued by the company purchasing the oil and responsible for making payments. Alternatively, an operator of a property may receive 100% of the proceeds from the purchaser or production, and in turn, issue its Division Order and make payments to all owners in an oil well.

On gas wells, typically, companies that purchase gas do not make distributions, but pay 100% of the proceeds from the sale of gas to the operator. The operator then issues its Division Order and makes payments to each owner.

Once a Division Order is issued, if there is a change in ownership (either an owner transfers all or part of his or her interest) those changes may be reflected in an amended Division Order or Transfer Order issued by the company making disbursements of production proceeds.

In instances where a company is making payments to an owner on multiple properties, it may issue what is referred to as a “blanket” Division Order, which covers a number of properties, setting out the property name and owner’s decimal interest in several properties, under one Division Order, rather than issue separate Division Orders on each property.

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Pat I Put the lawyer info in your inbox 0n upper right of this page.

Thanks, Michael. It worked!

Michael Hutchison said:

Pat,

For a profile pic go to settings in upper right of this page, click browse and find the folder where you keep your photos, click on the one you want (might have to click open) and it should load into the little preview box. Scroll down and click save.

You're Welcome Pat. Nice picture, the Bluebonnents give it a real touch of Texas! (the Dog is pretty too)

Mike, Alvin, Texas