Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on August 18, 2019 at 6:10

Randy Davidson @ Davidson, Summers APLC, Shreveport, LA 318.424.4342

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Permalink Reply by JACKIE on August 18, 2019 at 6:38

Thanks.   

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Permalink Reply by JACKIE on August 19, 2019 at 13:16

Also, does anyone know where can I obtain past Division Orders for myself from Chesapeake?Are they filed at the courthouse ?

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Permalink Reply by Skip Peel - Mineral Consultant on August 19, 2019 at 13:30

No.  Division Orders are not public record documents.  A DO is issued only once for unit wells, those that produce only from perforations within the unit boundary.  Depending on the operator, you may get additional DOs for Cross Unit Lateral wells where production is split between two or three separate units.

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Permalink Reply by JACKIE on August 19, 2019 at 13:43

I have copy of DO for 2012 that doesn’t have a signature.  

Permalink Reply by Skip Peel - Mineral Consultant on August 19, 2019 at 13:49

In Louisiana we tell mineral lessors not to sign a DO.  Some DO language may conflict with the terms of the underlying lease or impose additional conditions.  Operators are required to pay royalties without the signature but the mineral lessor must provide personal information related to tax accounting such as a SS number.  I am not familiar with Texas requirements in regard to executing a DO.

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Permalink Reply by JACKIE on August 19, 2019 at 13:55

Thank  you for this information.  Going to Desoto Parish Courthouse for copies of recorded leases. 

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Permalink Reply by Skip Peel - Mineral Consultant on August 19, 2019 at 14:03

FYI, the DeSoto Parish Clerk of Court offers a 24 hour online remote access account that would allow you to search for and download copies of O&G leases and any other conveyance instrument filed in the public record.  The cost is minimal.

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Permalink Reply by JACKIE on August 19, 2019 at 16:37

Do you have to have an account to access this

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Permalink Reply by Skip Peel - Mineral Consultant on August 20, 2019 at 1:15

Yes but you can get a 24 hour account online for something like $20.

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Permalink Reply by Dion Warr, CPL on August 20, 2019 at 2:55

Skip:

LA R.S. §138.1. Division order; precedence of lease; penalties for failure to pay royalties due

A. For the purposes of this Article, a "division order" is an instrument setting forth the proportional ownership in oil or gas, or the value thereof, which division order is prepared after examination of title and which is executed by the owners of the production or other persons having authority to act on behalf of the owners thereof.

B. A division order may not alter or amend the terms of the oil and gas lease. A division order that varies the terms of the oil and gas lease is invalid to the extent of the variance, and the terms of the oil and gas lease take precedence [Emphasis added.].

C. The execution of a division order is not a condition precedent to receiving payment from a lessee. The lessee shall not withhold royalty payments because his lessor has not executed a division order.

D. If the lessee fails to pay royalties solely because his lessor has not executed a division order as defined in this Article, the court shall award as damages double the amount of royalties due, legal interest on that sum from the date due, and reasonable attorney's fees. However, if the lessor fails to supply the name, address, and tax identification number upon written request of the lessee, the lessee's failure to pay royalties shall be deemed reasonable.

Acts 1992, No. 1110, §1.

The source and authority of your statement re: operators required to pay royalties without the signature is evidenced by Part C of the above statute.  Explain (or cite an explanation) as to why one would be counseled not to sign a division order, given the plain language of the statute above (particularly, Part B).

The owner does not waive their right to contest the royalty due upon executing a DO (now typically, a DOI letter, and not an actual Division Order) based upon this statute, as the owner is only held to a reasonable and not a strict standard.  For instance, if a unit survey plat is not available at the time of the execution of a division order by which the owner could reasonably calculate his basis in a unit, said owner could then challenge the amount of his interest upon becoming or being made aware of any such change based upon the subsequent filing of an approved unit survey plat.  Additionally, a revision of the unit survey may serve as notice as to the change of interest which is similarly not refuted by the execution of the original DO. The mere execution of a DO by an owner does not set his interest in stone.

(As always, IANAL)

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Permalink Reply by Skip Peel - Mineral Consultant on August 20, 2019 at 4:10

Yeah, but you're close. I like, C. The execution of a division order is not a condition precedent to receiving payment from a lessee. The lessee shall not withhold royalty payments because his lessor has not executed a division order.  Thanks, Dion.

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