A Montana Division Order is a legal document used in the oil and gas industry to determine and distribute revenue from the production of oil and gas wells in the state of Montana. It is a contractual agreement between the operators, working interest owners, and royalty interest owners of a specific well or lease. The purpose of a Montana Division Order is to outline the distribution of the proceeds generated from the sale of oil and gas from a well. It specifies the interests and ownership percentages of each party involved, ensuring fair payment allocation based on their respective stake in the well. There are different types of Montana Division Orders based on the ownership interests they address: 1. Working Interest Division Order: This type of Division Order pertains to the individuals or companies who have directly invested in drilling, operation, and maintenance costs of the well. Working interest owners share in the production expenses as well as the revenues derived from the sale of oil and gas. 2. Royalty Interest Division Order: It applies to the individuals or entities who own a royalty interest in the well. Royalty interest owners do not bear any production expenses but are entitled to a percentage of the revenue generated from the sale of oil and gas. This percentage is determined by the terms of the lease agreement with the landowner. 3. Overriding Royalty Interest Division Order: This type of Division Order addresses individuals or entities who hold an overriding royalty interest, which is a share in the production revenues derived from a specific lease. Unlike royalty interests, overriding royalty interests are usually created out of the working interest's share. Montana Division Orders also contain relevant information such as the legal description of the property, the well's location, the commencement date of production, the unit or lease designation, and the disbursement instructions for revenue payments. It is essential for all parties to review and sign the Division Order to ensure accurate revenue distribution and prevent disputes.
Montana Division Order
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