I just received a division order for the Stewart 30h-1 well of which I have a non participating royalty interest. There is a clause on the division order that has me puzzled. It reads:
"Payor may accrue proceeds until the total amount equals $null, or pay null, whichever occurs first, or as required by applicable state statutes."
I've never encountered this in an order before and was wondering if I should be concerned and have it changed or not worry about it. Thanks for any info.
All operating and working interest companies that are "payors" of royalty revenue have a minimum dollar amount for issuing a monthly check or making a direct deposit. Revenue due a payee must reach or exceed that set amount. For those lessors with small participating interests, especially in low volume wells, they may receive payment once a quarter or once or twice a tear instead of monthly. I suspect that is the reason for that DO clause.
Thanks Skip. I understand the reason for the clause but it's usually an amount ($50 or $100). I've never seen the term "null" used in this instance. Not sure how to interpret that.
Maybe a typo. I wasn't sure if you were omitting the amount yourself.
No, I wasn't omitting the amount. It's actually written as "$null" on the division order. I guess I should call them on Tuesday and ask them about it.