Division Orders
Some brief points on DOs addressing posts I've seen in the past. In Texas, DOs are binding until revoked by either party. If you disagree with the decimal interest or some other portion of your DO, you can revoke it in writing or refuse to sign it. However, the operator can require you sign a DO before paying royalties to you as long as the DO contains only those terms permitted by statute. The operator can hold your royalties in suspense until it receives a signed DO. If the DO contains terms beyond those permitted by the statute, you can refuse to sign it and the operator is not permitted to suspend your royalties as a result. Also, the operator is not required to begin making royalty payments until 120 days after the date of first sale of production from the well. As a result, it is common for an operator to send DOs a few months after the well is turned to sales. The DO does not amend your lease, but is used to clarify the method of royalty payment. If it is discovered that the DO incorrectly stated your decimal interest, and the operator has been paying you on that incorrect decimal, two scenarios occur. First, if you have been underpaid because the DO understates your decimal interest, you have a claim for that underpayment against the operator if then operator received the benefit of the underpayment, or the third party owner who received an overpayment. If you were overpaid because the DO overstates your interest, the third party owner who was underpaid as a result has a claim against you to recoup the monies.
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Replies to This Discussion
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Permalink Reply by Ben Elmore on
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If you signed a DO stating the incorrect interest and your lessee has been paying you according to that DO, you have no recourse against your lessee unless you can prove the lessee was unjustly enriched, but presumably the lessee is paying some third party the extra amount due you. Your claim is against the third party royalty owner to recoup the overpayment made to him/her. In that regard, your claim is one for title to the interest which is governed by a two year statute of limitations, so you can recoup two years of overpayment. You may be able to prove application of the discovery rule depending on the complexities of the title issue.
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Permalink Reply by Sherry Mobley on -
Hi Sue. We are heirs to the XTO Huskies DU Well 1H in Shelbyville. They cant get a clear title on the land. They never contacted us. The landowner had an attorney try to buy our surface rights and give up all bonuses and mineral rights. With a lot of footwork on our own and contacting the landowner and his attorney and their landman approaching us we found out we all own the mineral rights and he owns the surface. Imagine that. We had to contact XTO and would not have known XTO had a producing well on that property if we would not have went to check out our little inheritance. XTO s office told us to call the Division Orders Office in Fort Worth and we did. Again they did not really want to talk to me until they found out we were sent warranty deeds. Then we were able to give them our info and they again said we are behind. We will send our own landman to each of you for proof of heirship when we get to this well. I would love for anyone knowing anything about this well, possibly 3 wells to contact me. I would like to know the time limits too because I am in La, But they say until a clear title is done no money.
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Permalink Reply by adubu on
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Sherry--- suggest you may want (if you do not have attorney) talk to and hire Ben Elmore to assist you with this.
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