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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