When it comes to owning mineral rights, one key piece of paperwork you’ll encounter is the division order.

For many mineral rights owners, understanding division orders is critical to ensuring you receive the correct payments for your oil or gas production. This guide will break down what division orders are, how they affect your oil and gas royalty payments, and how to verify that the information on your division order is accurate.

A division order is a document that specifies the percentage of oil or gas royalties you are entitled to from a well or lease. It’s issued by the company producing the oil or gas on your property, and it outlines how much you’ll be paid based on your mineral rights interest.

The division order typically includes information such as the well or lease name, the legal description of the property, your ownership percentage, and any deductions (such as taxes) that may be taken from your payments. This document serves as an agreement between you and the company, ensuring that you receive payments in the correct amounts.

When you sign a division order, you are confirming that the percentage of royalties shown on the order is correct. This order directly impacts how much you’ll be paid for the oil or gas production from your property. The producer uses this document to determine your share of the revenue generated by the well or lease.

If there are any errors in the division order—such as incorrect ownership percentages—it could result in underpayment or over payment. This is why it’s important to review your division order carefully and ensure everything is accurate before you sign.

You’ll typically receive a division order after the first production from a well on your property. Once the oil or gas company has started producing, they’ll send you the division order, and you’ll need to review it before they begin sending royalty payments.

The division order will often be sent along with the first royalty check. If there’s a discrepancy or if you don’t agree with the details, you should contact the company as soon as possible to resolve any issues.

Verifying the accuracy of your division order is crucial. You should check the following details carefully:

1. Legal Description

Ensure that the legal description of the property matches the one on your deed or lease agreement. This includes the county, section, and township information.

2. Ownership Percentage

Verify that the percentage of ownership listed is correct. This should reflect your mineral rights interest, as outlined in your lease or deed.

3. Revenue Deductions

Look over any deductions, such as taxes, transportation fees, or other costs. These should be clearly listed and match your agreement with the oil company.

4. Payor Information

Make sure the company’s name and contact information are accurate. This will be the entity sending you payments.

If any of the above details are incorrect, contact the oil or gas company immediately to resolve the issue. Division orders are binding agreements, so ensuring the information is correct upfront can save you from future headaches.

If you find an error on your division order, don’t panic. Contact the company producing the oil or gas on your property as soon as possible. Explain the issue and provide any documentation you have to support your claim.

In many cases, the company will issue a corrected division order. If the mistake is significant (such as a large underpayment), they may also adjust future payments to make up for any discrepancies. It’s important to keep thorough records of all communications and any corrected documents.

At Fraction Royalty, we understand how confusing and frustrating paperwork like division orders can be.

That’s why we offer a free mineral rights evaluation to help you better understand your ownership and potential payments. By working with us, you can ensure that you’re receiving the right compensation for your mineral rights and avoid common mistakes that could lead to missed or incorrect payments.

If you have questions about your division order or need assistance in evaluating your mineral rights, fill out the contact form below to receive a free offer!

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