New Mexico Division Order: A Comprehensive Guide Keywords: New Mexico, division order, mineral rights, ownership, oil and gas, title, royalty, operator, drilling, production, payment. Introduction: A New Mexico Division Order is a legal document that outlines the ownership and distribution of interests in oil and gas production in the state of New Mexico. It is an essential tool in the oil and gas industry, ensuring fair distribution of royalty payments to mineral rights holders. Division orders also establish a contractual relationship between mineral owners and operators, providing clarity and protection for both parties involved. Types of New Mexico Division Order: 1. Standard Division Order: The standard New Mexico Division Order is the most common type. It details the percentage of ownership interest each mineral owner holds in a specific oil and gas well. This includes their proportionate share of the initial drilling costs, revenue, and royalty payments based on the production of oil and gas. 2. Amended Division Order: An amended division order is issued when there are changes or updates to the existing division order. This may occur due to changes in ownership interests, mineral rights transfers, or any modifications in the terms and conditions of the original agreement. Amended division orders ensure accurate and up-to-date distribution of payments. 3. Division Order Title Opinion (TO): A TO is a legal document prepared by an attorney specializing in oil and gas law. It provides a detailed analysis of the title and ownership history of a specific property, offering an opinion on the validity of the division order. A TO ensures that the mineral rights' owner's interest in the property is legitimate and protected. Key Elements in a New Mexico Division Order: 1. Property Description: The division order contains a detailed description of the property where oil and gas production occurs. This typically includes the legal description, survey information, and location details of the specific well. 2. Mineral Owners and Interests: The division order lists all the mineral owners and their respective ownership interests. This information determines the proportionate share of revenue and royalty payments each owner is entitled to receive. 3. Operator Information: The division order identifies the operator, which is typically the drilling company responsible for exploration, production, and distribution of oil and gas from the well. The operator is responsible for distributing royalty payments to mineral owners in accordance with the division order. 4. Royalty and Payment Terms: The division order specifies the royalty rate, which is the percentage of revenue that the mineral owner is entitled to receive. Additionally, it outlines the payment terms, including the frequency and method of payment distribution. Conclusion: New Mexico Division Orders play a crucial role in the oil and gas industry by establishing ownership interests and ensuring fair distribution of royalty payments. By defining rights and responsibilities, they act as legally binding documents that protect the interests of both mineral owners and operators. Understanding the different types of division orders and the key elements they contain is vital for those involved in the oil and gas industry in New Mexico.
New Mexico Division Order
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How to fill out New Mexico Division Order?
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FAQ
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.
Yes, it can be beneficial to sell your mineral rights for a fair price, even producing rights. First, sellers must be aware of the different stages of the production process. They must also know the value their minerals and royalties command in every development stage.
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 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.
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.
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 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.
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.