The Alabama Oil and Gas Division Order is an essential legal document that governs the distribution of proceeds from oil and gas production in Alabama. It is a formal agreement between the mineral rights owner and the operator of the oil and gas well, outlining the respective interests and responsibilities of both parties. One important aspect of the Alabama Oil and Gas Division Order is the allocation of production revenues among all the mineral interest owners. The division order specifies the percentage or decimal interest each owner holds in the production, which determines the proportionate share of revenue they are entitled to receive. This ensures a fair and accurate distribution of proceeds based on ownership percentages. Another crucial element covered in the Alabama Oil and Gas Division Order is the manner in which payments will be made to mineral owners. It includes details about the frequency of payments, accounting procedures, and any applicable deductions or expenses that may be subtracted from the revenue before distribution. In addition to these standard provisions, there can be different types of Alabama Oil and Gas Division Orders, depending on specific circumstances: 1. Basic Division Order: This is the most common form of the division order, used when all mineral interest owners have agreed to the terms and conditions regarding revenue allocation and payment procedures. 2. Modified Division Order: In some cases, modifications or exceptions to the standard terms may be required. A modified division order is used to address these specific changes, such as alternative payment methods or unique provisions. 3. Default Division Order: If any mineral interest owner fails to respond or provide necessary information requested for the division order, a default division order may be issued. This document allows the operator to make payments without the absent owner's participation until they respond or resolve any outstanding issues. 4. Amended Division Order: Similar to a modified division order, an amended division order is used to revise or update the terms of an existing division order. It may be necessary when there are changes in ownership or other circumstances that require modifications to the original agreement. Overall, the Alabama Oil and Gas Division Order plays a crucial role in maintaining transparency and fairness in the distribution of oil and gas proceeds among mineral interest owners. It ensures that each party receives their rightful share and establishes clear guidelines for revenue allocation and payment procedures.
Alabama Oil and Gas Division Order
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How to fill out Alabama Oil And Gas Division Order?
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FAQ
The payor may not require a division order, however, that requires much more than is necessary for it to verify the interest you claim to be entitled to. You may insist that the payor submit a division order containing no more than is required by Texas law.
The Division Order is a document whereby the revenue distributor (either the Operator or the 1st Purchaser) and the recipient (the royalty owner) agree on the exact decimal interest (Net Revenue Interest or NRI) owned within a well, lease, production unit, or field-wide unit.
To put it another way the formula is: lessor's acres in unit ÷ total number of acres in unit × lessor's ownership interest × lessor's royalty percentage = lessor's decimal interest.
A Division order is an instrument that records an owner's interest in a specific well. It should include the name of the well, the well number, interest type, and your decimal interest.
The division order describes the minerals, it asks for information about yourself, and often asks you to agree to certain things related to the payment of royalties. But beware, in Oklahoma you are not required to sign and return a division order. In fact, you may be unnecessarily impairing or giving away your rights.
A division order is a contract between you and the operator (an oil and gas company). Typically, receiving a division order means that the operator is about to drill, or that the operator has already drilled a well and your minerals are producing.
As for receiving an oil and gas royalty payment, you will receive it ONLY IF the oil company drills a well and ONLY IF the well is a successful producer. Most wells drilled in a new area have only a 20% probability of being successful. There is a lot of money to be made in receiving monthly royalty checks.
A Division Order is an instrument which sets forth the proportional ownership in produced hydrocarbons, including crude oil, natural gas, and NGL's. Sometimes the Division Order is referred to as a division of interest.