Delaware Oil and Gas Division Order is a legal document prepared by the Delaware Oil and Gas Division (OGD) to facilitate the orderly distribution of revenues generated from oil and gas production on a specific tract of land. It outlines the details of the ownership interests, revenue distribution, and other relevant information related to drilling and production activities. The Delaware Oil and Gas Division Order serves as a crucial agreement between the producer, typically an oil or gas company, and the royalty owners or interest holders of the land. It ensures that the distribution of proceeds from the sale of oil and gas is accurate and fair, minimizing any potential disputes or conflicts. The division order includes several key elements. Firstly, it provides a legal description of the specific tract of land and the corresponding well, identifying the precise boundaries and location. It further states the names and addresses of the current interest owners, including royalty owners, lessees, and various working interest owners. This information helps to establish the individuals or entities entitled to receive payments from oil and gas production. Additionally, the division order specifies the percentage or fraction of ownership interest of each party involved. This division is essential in determining the proportionate share of revenues each interest holder will receive from the sale of oil and gas produced on the designated tract. Various types of division orders exist within the Delaware Oil and Gas Division. These may include: 1. Royalty Division Order: This type of division order is used when the interest owner is entitled to a fixed percentage of revenue from production. Royalty owners typically do not bear any costs of drilling or operating the well and receive payment directly based on their specified royalty percentage. 2. Working Interest Division Order: Working interest owners are parties who participate in the costs and risks of drilling and production operations. They receive a portion of proceeds from the sale of oil and gas after deducting operating expenses and royalties. The working interest division order outlines the specific working interest percentage attributed to each owner. 3. Overriding Royalty Interest Division Order: An overriding royalty interest is a share of revenue reserved for a person or entity independent of the ownership of the land. It is usually granted to a third party, such as a landowner, in exchange for granting permission to drill and produce oil and gas on their property. The overriding royalty interest division order outlines the percentage or fractional interest entitled to the overriding royalty interest owner. In conclusion, the Delaware Oil and Gas Division Order is a crucial document that establishes the ownership interests, revenue distribution, and other pertinent details related to the production of oil and gas on a specific tract of land in Delaware. It ensures a fair and accurate payment process for all parties involved and helps prevent potential disputes.
Delaware Oil and Gas Division Order
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How to fill out Oil And Gas Division Order?
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FAQ
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.
?To pay Lessor for gas (including casinghead gas) and all other substance covered hereby, a royalty of 3/16 of the proceeds realized by Lessee from the sale thereof.? This simply means the operator will pay a royalty of 3/16 of revenue generated from production on the property.
Take, for example, a landowner who has 300 acres in a 500-acre production unit while signing an oil and gas lease of 15% royalty. Their decimal interest is calculated as follows: (300/500) × 0.15 equals 0.09, which represents their decimal interest.
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.
You may have noticed on your check stubs an ?owner interest? or ?net revenue interest? or a ?decimal interest?. The operator will then multiply your interest by the quantity of oil and gas produced and the current price to determine your oil and gas royalty payments.
If there is more than one mineral owner, multiply the net revenue by the fractional interest of each owner to determine their respective royalty 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.