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Oil/Gas/Division Order.



I have mineral rights for wells drilled in DeWitt County, Tx. They started producing July 1 of 2013. I'm curious as to how long it will take the company to issue a division order. I've heard many different time frames. We were expecting to have the division order by mid september.



To issue the very first payment for a new well, Texas law allows 120 days from the first day of the month following the date of first production.  So if the well began producing (and the production was saved) on July 1, the operator or payor has until November 30 to have the first check tendered.  That means printed and mailed.

That said, this is the chain of events that should typically happen before that first payment can be issued.  

First, the operator must send a landman to the courthouse to compile what is called a supplemental runsheet.  This will be a collection of all documents filed into the courthouse (deed records, probate, UCC, district court, etc.) between the cutoff date of the drilling title opinion and that first day of production.  This can take anywhere from a couple of days to a month or more, depending on the complexity of title, number of tracts involved in the pooled unit, etc.

Next, the landman sends the supplemental runsheet to a title attorney chosen by the operator for this purpose, so the attorney can prepare what is called a "division order title opinion" or DOTO for short.  The title attorney then reviews and analyzes the drilling title opinion(s) and the new documents, to determine who is entitled to a proportionate share of the production revenues from the new well or unit.  This phase usually takes at least 2 months.  It can take up to six months or more in extreme situations, but I'll talk about that in a minute.

After it's finished, the title attorney sends the DOTO to the operator's in-house landman.  The in-house landman then gives at least a full copy of the opinion to the in-house Division Order Analyst.  The division order analyst must carefully review it, create a spreadsheet from it (for many reasons dealing with internal systems and procedures) and then translate it into a complete list containing the names of every owner of every type who is entitled to a proportionate share of the revenues every month.  This is called a "division of interest" or DOI for short.  This DOI is loaded into the computer database system at the company, and division orders can only be printed after the DOI has been loaded into the computer.

Division orders are then printed and mailed to all owners whose address is known.  For all others, the hunt begins.  If the contents of the division order meet the requirements of the Texas statutes (90.402), the operator/payer can withhold payment until the division order is signed, and no interest has to be paid if payment is not made within the 120-day deadline.

If the operator fails to issue the division order within the 120-day deadline, any owner entitled to share in the revenues may write a demand letter to the operator invoking the right to receive statutory interest on the unpaid revenues, compounded from the date of first production.

As you can see, the date you can expect to receive your first payment can vary quite widely, depending on the amount of time needed for each step along the way.

I hope this information helps.  Let me know if you have any other questions.


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Marsha Breazeale, M.Ed., CDOA, CPLTA


All questions regarding division orders; ownership decimal calculations; title ownership and payer record changes (testate/intestate inheritance; deed; assignment; court order); oil and gas lease analysis for record-keeping and purposes of payment by operator or payer; pooling, horizontal wells, horizontal well allocation units; unclaimed property reporting; royalty owner relations questions. All questions concerning administration of surface land contracts and payment questions, such as for Surface Right-of-Way, Sub-Surface Right-of-Way, Easement, Surface Use Agreement. All questions regarding industry-standard and company-specific policies that affect land owners.


Sr. Staff Division Order Analyst. Certified Division Order Analyst (CDOA, National Association of Division Order Analysts) and Certified Lease Analyst (CPLTA, National Association of Professional Lease and Title Analysts) with 35 years of experience as a combination division order analyst and lease analyst in exploration and production in the oil and gas industry.

National Assoc. of Division Order Analysts (NADOA), National Association of Division Order Analysts (NALTA), American Association of Professional Landmen (AAPL), American Society of Trainers and Developers (ASTD)

"How an Oil & Gas Exploration & Production Company Operates" and "Principles of Oil & Gas Lease Analysis: Standard Clauses", Oil Patch Press; Articles in NADOA Magazine; LandFocus EDU Professional Training Manuals

Education/Credentials Management from Our Lady of the Lake University in San Antonio; M.Ed. in Instructional Design from WGU Texas.

Past/Present Clients
Past 15 years: GeoSouthern Energy Corporation; Contango Oil Co./Crimson Exploration & Operating Inc.; Apache Corporation; BP America; Marathon Oil; Newfield Exploration

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