A Visual Guide for Mineral Owners
Division orders can be confusing. This guide breaks down each section and shows you exactly what to look for before signing.
A division order confirms your ownership interest and authorizes the operator to pay you royalties.
When a well starts producing, the operator needs to know who to pay and how much. The division order documents your decimal interest—the fraction of production you're entitled to—and provides your payment information.
Important: A division order does not change your ownership. It simply tells the operator your share based on the title research they've conducted.
New well started producing
Well was recompleted
Operator changed
Your ownership transferred
Identifies the specific well this division order covers.
Verify: Make sure the well is on your property and the legal description matches your deed.
Your name and address as owner of record.
Verify: Check that your name is spelled correctly and address is current for check delivery.
Your share of production, expressed as a decimal.
This is the number that determines your check amount. If this is wrong, you'll be paid incorrectly on every check.
How and where you want to receive payment.
Tip: Direct deposit is faster and eliminates lost checks. Consider setting it up.
Legal terms governing your payments. Watch for problematic language.
Red flag: "Owner agrees to indemnify and hold harmless..."
Red flag: "This division order amends the terms of any lease..."
Red flag: "Owner agrees to waive claims for prior underpayments..."
Know your rights: In Texas and Oklahoma, division orders cannot change lease terms. You can strike problematic language.
Your decimal interest is calculated from multiple factors. Here's the formula:
(Net Mineral Acres ÷ Unit Acres) × Royalty Rate × Ownership Fraction = Decimal Interest
Your minerals: 10 net mineral acres
Pooled unit size: 640 acres
Royalty rate: 25% (0.25)
Your ownership: 100% (1.0)
Calculation:
(10 ÷ 640) × 0.25 × 1.0 = 0.00390625
Rounded: 0.00390625 or approximately 0.0039
Can't calculate it yourself? Ask the operator for a "decimal interest calculation sheet" showing how they arrived at your number. They should provide this upon request.
Your name is spelled correctly
Your mailing address is current
The well is on your property
Legal description matches your deed
Decimal interest seems reasonable
You've read all terms and conditions
Indemnity/hold harmless clauses
Language "amending" lease terms
Waivers of prior claims
Clauses limiting royalty calculations
Anything you don't understand
You're allowed to strike language you disagree with, initial the changes, and return the division order. The operator may accept it as modified. Don't feel pressured to sign exactly as presented.
In most states, yes—operators are allowed to hold your royalties until you return a signed division order. However, in Texas, operators must pay you within certain timeframes even without a signed division order (they can place you in suspense, but must eventually pay). Check your state's laws, but signing promptly usually gets your payments started faster.
Don't sign until you resolve it. Contact the operator's division order department and request a calculation sheet showing how they arrived at your decimal. Compare it against your deed, lease, and any pooling orders. If there's a discrepancy, they should correct it before you sign.
In Texas and Oklahoma, no—by law, a division order cannot amend your lease terms. However, some division orders contain language attempting to do so. Strike any language saying the division order "amends" or "supersedes" your lease. Your lease controls; the division order is just for payment purposes.
You may receive division orders from the operator (who drills and operates the well) and separately from purchasers (who buy the production). Each needs to know your interest. You may also receive new division orders when wells are recompleted, when operators change, or when units are modified.
We're happy to help mineral owners understand their assets
If you're trying to understand what you own or what your minerals are worth, Buckhead Energy provides free consultations and valuations.
Disclaimer: This information is provided for educational purposes only. Division order laws vary by state. Consult with an oil and gas attorney for specific questions about your division orders.