What every mineral owner needs to know before signing.
Get Your Free Mineral ValuationIf you own producing mineral rights, you'll eventually receive a division order from the operator. This document often arrives before your first royalty check, and understanding it is important.
A division order is essentially a payment authorization. It tells the operator where to send your royalties and confirms your ownership interest (or "decimal") in a well or drilling unit. While seemingly simple, division orders deserve careful review.
Division orders serve several important functions:
Confirm ownership: Verify you are a mineral owner entitled to royalties
Establish decimal interest: Document your share of production
Collect payment information: Name, address, Social Security number for 1099 reporting
Authorize payment: Give the operator permission to distribute royalties
Note: A division order is NOT a lease and does not grant the operator any drilling rights. Those rights come from your oil and gas lease.
The most important number on the division order is your decimal interest. This determines how much you get paid. Verify it matches your ownership by calculating:
For example: 10 NMA in a 640-acre unit with 1/4 royalty = 10/640 × 0.25 = 0.00390625
Name spelled correctly
Current mailing address
Tax identification number
Correct well name or unit name
Proper legal description
Reference to your specific lease
Be cautious if a division order contains:
Lease amendment language: Terms attempting to change your royalty rate or other lease provisions
Warranty provisions: Making you warrant title beyond what's in your lease
Indemnification clauses: Requiring you to indemnify the operator
Unusual deduction language: Authorizing deductions not in your lease
In Texas, the Division Order Statute (Texas Natural Resources Code §91.402) protects mineral owners by preventing division orders from changing lease terms. Many other states have similar protections.
This is a common question, and the answer depends on your state:
Operators must pay royalties within the statutory timeframe whether or not you sign the division order. You cannot be denied payment for refusing to sign. However:
Faster first payment
Confirms your payment info
Avoids ownership research delays
Payment delays
Operator title research
Funds held in suspense
Tip: If you disagree with terms in the division order, you can strike through objectionable language, initial the changes, and return it. Or write "for payment purposes only" above your signature.
If you believe your decimal interest is incorrect:
Calculate your interest: Use your net mineral acres, unit size, and royalty rate
Contact the operator: Call the land or revenue department to discuss
Provide documentation: Share deeds, leases, or title opinions supporting your claim
Get professional help: A landman or attorney can research and advocate for you
Don't sign a division order with an incorrect decimal. Signing may be interpreted as acceptance of that ownership percentage, even though it shouldn't legally bind you to an incorrect amount.
Get a free valuation to understand what your producing minerals are worth.
Request Your Free ValuationA division order is a document that authorizes an oil and gas operator to distribute royalty payments. It specifies your ownership interest (decimal) in a well or unit. The operator sends division orders to all mineral owners before paying royalties to confirm payment information and ownership percentages.
In most states, including Texas, operators must pay royalties within a certain timeframe whether or not you sign the division order. Signing is not technically required to receive payment. However, signing can expedite payment, and refusing may cause delays while the operator verifies your ownership independently.
Verify your decimal interest matches your ownership calculation, confirm your name and address are correct, check that it references the correct lease, and review any additional terms beyond basic payment authorization. Never sign a division order that attempts to amend your lease terms.
Your decimal interest is your share of production, expressed as a decimal. It's calculated from your net mineral acres, royalty rate, and the unit size. For example, owning 10 net mineral acres in a 640-acre unit with a 1/4 royalty rate gives you a decimal of approximately 0.00390625.
A division order should not change your lease terms. In Texas and many other states, division order statutes prevent division orders from amending lease provisions. If a division order contains language that conflicts with your lease, the lease controls. Be cautious of division orders with unusual terms.
Disclaimer: This information is for educational purposes only and should not be considered legal advice. Division order laws vary by state. Consult with a qualified attorney for specific questions about division orders you receive.