Kansas Division Orders: A Comprehensive Overview In the oil and gas industry, the term "Kansas Division Orders" refers to legal documents that define the various interests and responsibilities of parties involved in the production and distribution of oil and gas in the state of Kansas. These division orders play a crucial role in ensuring fair distribution of proceeds and maintaining transparency in lease operations. A Kansas Division Order typically contains the following key components: 1. Operator Information: The division order identifies the operator, the company responsible for the exploration, extraction, and production of oil and gas resources on a particular lease. The operator is responsible for distributing revenues in accordance with the division order. 2. Working Interest Owners: The division order includes a comprehensive list of working interest owners. These individuals or entities hold a percentage interest in the lease and are entitled to a corresponding share of the revenues generated from oil and gas production. 3. Non-Working Interest Owners: Besides working interest owners, there may be non-working interest owners, which include royalty interest owners and overriding royalty interest owners. These parties hold a percentage interest in the lease and are entitled to receive a portion of the total revenues generated without bearing the costs associated with operations. 4. Description of Interests: The division order provides a detailed description of the interests held by each owner. It specifies the exact location and boundaries of the property covered by the lease, along with the specific sections, townships, and ranges associated with it. 5. Decimal Interest Allocation: The division order assigns a decimal interest to each owner, representing their proportionate share in the oil and gas production revenue. This decimal interest is calculated based on factors such as acreage, lease terms, unitization agreements, and any other relevant agreements or contractual provisions. 6. Royalty Rates: For royalty interest owners, the division order stipulates the specific royalty rate applicable to their share of production revenue. Royalty rates are usually expressed as a percentage of the total value of production and may vary depending on factors such as market conditions, lease terms, or specific contractual agreements. Types of Kansas Division Orders: 1. Original Division Order: An original division order is created when a new lease is established or a new working interest owner joins an existing lease. It provides a foundation for revenue allocation and sets the stage for subsequent distribution of proceeds. 2. Supplemental Division Order: A supplemental division order is issued when changes occur within the lease arrangement, such as a change in ownership, assignment, or amendments made to existing agreements. It ensures that all parties are aware of new terms and provisions that may affect their interests and revenue distributions. 3. Division Order Stipulation: In certain cases, the division order may include additional stipulations or conditions agreed upon by the involved parties. These stipulations might cover issues such as preferential rights, drilling penalties, or specific guidelines for the determination of interests, providing further clarification and protection for all parties involved. In conclusion, Kansas Division Orders are essential legal documents in the oil and gas industry, providing clear guidelines for revenue distribution and protecting the rights and interests of all parties involved in the lease. They ensure transparency, fair allocation, and effective management of resources, facilitating the smooth functioning of oil and gas operations in the state of Kansas.
Kansas Division Orders
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FAQ
The average depth of a Kansas well today is approximately 3,500 feet. The cost of drilling and equipping an average 3,500-4,500 foot well can be approximately $450,000. At approximately $180,000, the cost of a 3,500-4,500 foot dry hole is considerably less than a fully equipped producing well.
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.
The most common way is through a will or estate plan. When the mineral rights owner dies, their heirs will become the new owners. Another way to transfer mineral rights is through a lease. If the mineral rights are leased to a third party, the new owner will need approval from the current lessee to claim them.
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.
A division order analyst works for a petroleum company and oversees company records. As a division order analyst, you establish, prepare, review, approve, and maintain documents regarding production and land ownership for royalty owners. You generally work as a part of the land department at an oil company.
The purpose of a division order is to protect the company paying the royalty (?payor?) from double liability. If you sign a division order and it turns out that you should have been paid a larger interest than shown on the division order, the company is protected as long as it paid ing to the division order.
A division order is a contract between the owner of a royalty or other interest in oil and gas (payee) and the company that will be paying for royalty and other production on its sale (payor).
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.