I received a division order from TransOil Marketing LLC regarding mineral interests I own in Throckmorton Co. What’s unique is that, while it’s titled and formated like a division order, it is regarding “purchasing crude oil on a lease on which you own an interest”. This has nothing to do with any drilling. I’m unfamiliar with this type of division order - is this legit? Included is a 1099 form, which would be standard procedure for a legitimate DO with a new operating relationship, and I don’t want to give that information until I know this is on the up-and-up. Anyone know anything about this? Thank you
Royalties can be paid by the operator or by the purchaser. Larger operators always pay their royalty owners. It is usually smaller operators who opt for the oil purchaser to pay the royalties. Transoil Marketing has a website linked to Tauber Oil (taurberoil.com) and it is a crude oil transporter and purchaser. You can contact the operator and confirm that Transoil is taking over the royalty payments. Never hurts to be careful.
Transoil is used by several smaller operators in Throckmorton to buy oil and they pay royalties for them.
Thank you TennisDaze and Wade. I’ll contact TransOil on Monday.
Additionally, compare the terms of your lease with the operator and the terms of the Transoil‘s agreement/DO as they will be paying you your royalties. This includes not just the RI but any special terms that were negotiated during the original signing like, warranty of title, deductions ETC.
Texas has a “statutory DO” that should be followed closely. Some purchasers add additional language that protects them from issues with operators that may not be beneficial to you. I just went through this when the operator of one of our leases changed and royalty payments were to now be paid by the gatherer and not the operator. The gatherer’s attorney acknowledged the company was not provided a copy of our lease, did not know that warranty of title had been deleted originally (it was a term of their DO to us) and further proposed to withhold payments to RI owners if working interest owners were behind in their payments.
A DO cannot change the terms of the lease but, if you sign one that does, you can be held to the new terms until you rescind it.
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Hi Susan, We just received the same type of division order from the same company with the same wording. I too had concerns about the wording. How did your research go. If you could let me know I would appreciate it.
Thanks, Van