Montana Division Orders: An In-Depth Explanation In the state of Montana, Division Orders play a vital role in the oil and gas industry. A Division Order is a legal document that establishes the proportionate ownership and distribution of proceeds from the production of oil and gas among the various parties involved, including mineral rights owners, operators, and royalty interest holders. Montana boasts a rich history in oil and gas exploration, and Division Orders are essential in ensuring fair and accurate distribution of revenue generated from these resources. When an oil or gas well is drilled in Montana, a Division Order is typically created to provide a detailed breakdown of the ownership interests and rights of each party involved. Key aspects covered in a Montana Division Order include the identification of the well and specific lease or property affected, the names and addresses of all interest owners, their respective ownership percentages, and the decimal interests attributed to each party. Decimal interests are calculated based on the ownership percentages and are used to determine the proportionate distribution of revenue generated by the well. Different types of Montana Division Orders may exist, each tailored to specific circumstances and parties involved. Here are three commonly encountered types: 1. Mineral Interest Division Order: This type of Division Order is used when the mineral rights' owner, who holds the legal title to the minerals beneath the surface, has entered into an agreement with an operator to extract oil or gas. The Division Order outlines the mineral owner's ownership percentage and the corresponding decimal interest. 2. Royalty Interest Division Order: When a landowner leases their mineral rights to an operator, they are entitled to a royalty interest, which represents a share of the gross production revenue. Royalty owners are provided with a Division Order specifying their percentage of royalty interest and decimal interest, ensuring accurate distribution of royalty payments. 3. Overriding Royalty Interest (ORRIS) Division Order: In some cases, parties other than the mineral rights owner and lessor may hold overriding royalty interests. These interests are created out of the working interest but do not reduce the revenue derived by the mineral rights owner or lessee. ORRIS Division Orders ascertain the share of overriding royalties to be disbursed to holders based on their respective interests. To conclude, Montana Division Orders are fundamental legal documents that establish the ownership interests and distribution of revenue generated from oil and gas production in the state. Mineral Interest Division Orders, Royalty Interest Division Orders, and Overriding Royalty Interest Division Orders are all essential subtypes utilized to ensure fair allocation of proceeds among the various parties involved.
Montana Division Orders
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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.
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.
Your county office of Recorder of Deeds will also have information about ownership of mineral rights. You may want to consult an attorney or a professional who specializes in deeds and land titles to determine ownership.
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.
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.
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.