A division order: checking your decimal before you sign
A division order comes from the operator or the purchaser of production once a well is producing. It states your decimal interest and asks you to confirm it so royalty can be paid. It is a payment instruction, not a new lease.
What it does
Your decimal is usually your net mineral acres divided by the acres in the unit, times your royalty fraction. For example, 5 net acres in a 640 acre unit at a 1/5 royalty gives 5 ÷ 640 × 0.2 = 0.0015625.
Many states treat a division order as a payment instruction that does not change your lease. Even so, read it for anything added: a warranty, an indemnity, a new way to figure value, or language about deductions.
Payment is often held until a division order comes back, so a quick check beats a long wait. If the decimal looks wrong, ask for the math before signing.
What we mark on a review sheet
Normal
- Your name, an owner number, the well or unit, an effective date and a decimal.
- A request for a tax form so payments can start.
Missing
- How the decimal was figured: your net acres, the unit acres and the royalty fraction.
- A plat or description of the unit.
Ask about
- A decimal that does not match your own math.
- Language that changes how royalty is valued, adds deductions or adds a warranty.
Questions to ask the company
- How did you figure my decimal? Please show my net acres, the unit acres and the royalty fraction.
- What is the effective date, and will I be paid back to first production?
- Does anything in this division order change my lease? If so, will you strike it?
Common questions
Do I have to sign a division order?
Payment is often held until you do. In many states a division order does not change your lease, but read it for added terms before signing.
How is the decimal on a division order figured?
Usually your net mineral acres divided by the unit acres, times your royalty fraction. Ask the operator for the numbers it used.
Send it before you sign
Tell us what you got and what you want to know. We reply by email and tell you how to send the pages. A landman reads them and sends back a one-page review sheet.
Email hello@landman.review with what you got and your question, or call (307) 263-8515.