The Division Order equation is fairly simple. If the decimal matches, then you can send it in.
net acres/actual spaced acres x royalty x percentage of perforations in your section.
For example: 10/640 * 3/16ths * 1.00= 0.00292969
The well may be spaced at 640 acres, but the section may not be exactly 640 acres. The northern tier (sec 1-6) and western tier (6,7,18,19,30,31) are often slightly different to correct for the curvature of the earth.
The percentage of perforations in your section is determined by a survey of the well which is usually posted on the OCC well records site. There is also usually an order by the OCC which lists them as well. Make sure the division order matches. Sometimes, they do not. For Section 33, the case number is 2018010868 and the order is 707865. All of the perforations are in section 33, so the last term is 1.00. The section is 640 acres. So just put in your net acres and see if the DO matches.
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Oklahoma does not require division orders. Some companies attempt to include items that are not necessary and are favorable to themselves.
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Good point. I only sign the DO if it is in the NADOA format. There are several posts on that format already.
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I have royalty interest, both natural gas and crude oil, in another OK County. The DO’s I rec’d came from the mineral purchaser’s not from the operator. The purchaser’s for the Lillian 1405 Canadian County lease, 3-33MH well(PUN #: 017-226056-0-0000) are Superior Pipeline Co LLC (natural gas) and Arm Energy Mgmt LLC (crude oil). Once the operator(Red Bluff Resources LLC) receives their DO from me, will I eventually receive DO’s from these (or future) mineral purchaser’s also? BTW- the DO they sent me was not in the NADOA format.
Thank you Richard for the clarification pertaining to OK’s statues vis a vis DO’s.
0_NADOA_Division Order Model Blank Form 2017v 2.pdf (78.2 KB)
I will take the information off of their DO and put it on the NADOA form and send it.
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Thank you Martha for guiding me through this process; I really appreciate you; how you diligently help us all in this forum - I feel most fortunate. IMHO -You have the heart of a grateful, compassionate, and trustworthy servant; very admirable qualities indeed!!
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I have been blessed by a career and family in the business, so time to pass it on…
OK does not require Division Orders, but I turn them in anyway for several reasons.
#1, it makes me keep up on the status of the wells and I check that I am paid correctly. The Division Orders are not always correct, so time to fix them in the beginning saves heartache later. And I pre-set them to $25 minimum payment instead of $100.
#2, as time goes on, wells get sold and I want the same division order decimal to match each time (sometimes I have found errors that would have cost me royalty money)
#3, Four generations of paper files have been priceless in keeping our mineral records relatively straight and in good shape. I do the new Division Orders for my heirs so that they can have an excellent "paper trail"as well. Moving into the digital world now, so I scan everything and back up in the cloud. I also keep an excel file for each well and the correct division order and the date I mailed it. Thank goodness, my mom had done that before me!
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Thanks again Martha for sharing your expertise. I’m sending in the NADOA form that you provided today; I’m grateful to you for sending today’s tips before I put in the mail. Many blessings to you and yours:)
Martha is correct, no division order is required in Oklahoma. I prefer to provide “information in lieu of division order”. Some companies attempt to include warranties or other items favorable only to themselves.
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Your point is well taken Richard. As a mineral owner newcomer, I cannot give enough accolades of appreciation to you, Martha, and many other contributors to this very vital forum.
I have yet to face negotiating an O & G lease. I been content thus far to just make my election preference via the OCC’s Pooling Order. I assume that choice would be considered “playing it safe”. That position is founded to a large part because of the “risks” involved such as what you eluded to in your comments. Maybe someday I will be confident enough to try to negotiate a lease. If that day comes, it will be because of the education that I have been fortunate to have received from forum contributors like yourself. Thank you sir for your time, help, and concern for those of us that could be easily preyed upon by unscrupulous players.
You mentioned in bullet point # 1, " Division Orders are not always correct:". What course(s) of action should a royalty owner consider pursuing if their first royalty income check isn’t consistent with the language of the DO or the Pooling Order?
Get in touch with the payor and ask them why the discrepancy. There are reasons and they can address those or correct them if not in accurate.
Thank you Todd, I will certainly do that as a first resort then do a re-post.