Guide · the owner's primer

How to read a division order

The decimal, where it comes from, and how to check it against your deed.

A division order is the operator's statement of what share of a well's production it intends to pay you. It arrives after a well starts producing, and the operator may hold your money until you sign one. It is not a contract that changes your lease, and in Texas it cannot: the Natural Resources Code says a division order cannot amend the lease it pays under.

The decimal

The number that matters is the decimal interest — something like 0.00718750. It is your share of every barrel and every mcf the well sells. For a royalty owner it is built from three things:

Decimal = net mineral acres ÷ unit acres × royalty = 36.75 ÷ 1,280 × 0.25 = 0.00717773. If the division order says something smaller, one of the three pieces is wrong — most often the net mineral acres, because an heirship or a deed was read differently.

Timing, and interest

Texas sets the clock. Payment is due 120 days after the end of the month of first sale, then within 60 days (oil) or 90 days (gas) of the month of sale. When an operator pays late without a lawful reason to hold the money, it owes interest. An operator may hold payment where title is in dispute or where it has not received a signed division order containing the items the statute allows it to ask for — but it may not use the division order to add new conditions.

What to check before you sign

• Does the decimal reproduce from your acres, the unit size, and your royalty?
• Is the unit size on the order the same as the one the operator filed?
• Does the order try to add terms — an indemnity, a different royalty basis, a release? Strike them.
• Is your name and the capacity (individual, trustee, estate) exactly right?

The plat's "Your interest" box runs this arithmetic for you from the tract's acreage, and shows your share of what the wells touching the tract made. Bring the division order and we will test it.