Replies to This Discussion

Permalink Reply by danny meyers on July 13, 2009 at 16:08

In DeSoto parrish I recieved the division order about 3 months after production began.

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Permalink Reply by Bacon on July 14, 2009 at 1:27

Dad got his DO about 30 days after being turned to sales. RR parish, Questar.

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Permalink Reply by The_Baron on July 14, 2009 at 4:08

The operator will usually begin work on the division order when the well is completed.

How long it takes depends on the complexity of the title in the Unit. I have seen some take up to six months.

You will receive it when it is ready. If you agree with your interest, sign it and start getting your money.

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Permalink Reply by Caiman on July 14, 2009 at 5:25

Sorry for interrupting,I have a couple of questions if you don't mind.I got a division order on a new oil well in panola county near Marshall,also a few weeks before -payout lists on 3 other gas wells.This was inherited from my father 1.5 years ago.My sister and I don't even know the location of the property or how much property is there.The division is real small.Around 80,000 a month production on the first 3 wells may give us 1.80.Do I need to use certified letters to the production company for information,such as original lease copy,list of who other part owners of property is,land plats or will A phone call get me any info.Will I most likely have to search courthouse records for some of this.Any info. on A starting place would help.I'm also wondering if its even worth the trouble,but I never signed the division order until they show me how they came up with so many 0's after the decimal point on the division.Thanks for your time and any suggestions. James

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Permalink Reply by The_Baron on July 14, 2009 at 7:00

Your interest is calculated by the following:

(net mineral acres/acres in unit) x royalty = royalty interest

So, an example 40 acres in a 640 acre unit with 1/4 royalty = 0.015625 or 1.5625%

Start with a phone call if you want more info. If you get no response, then get serious with certified letters.The title attourney should have all the courthouse records.

The title attourney is not going to cheat you, but somtimes mistakes are made. It all depends on how much time you are willing to commit, but it sounds like your interest is small at best.

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Permalink Reply by NA on July 14, 2009 at 8:33

Baron,

If you dont sign the DO will you still recieve royalty? Also does it matter if the peoperty is in Texas versus Louisiana DO wise?

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Permalink Reply by The_Baron on July 14, 2009 at 9:03

If you don't sign the DO, don't be suprised if they start withholding a good chunck for taxes etc.

I have little experince in TX, so its hard for me to answer the question, but the same rules apply for calulating interests.

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Permalink Reply by NA on July 14, 2009 at 9:13

Thanks for the info.

I believe the DO in Texas holds more weight than one in Louisiana. I'm sure some of the legal eagles on the site can verify that.

See the following article for problems that may arise when dealing with DOs
http://www.fwbusinesspress.com/display.php?id=8890

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Permalink Reply by Dion Warr, CPL on July 15, 2009 at 5:17

NA:

I would not necessarily agree with you insofar as the DO in concerned in TX vs. LA. The statutes that you cite were passed mainly as a measure to prevent unscrupulous lessees and operators from materially changing your lease or otherwise modifying or reducing your interest by deception or under coercion of penalty for not acknowledging one's interest by executing the DO.

Still today, some larger landowners and large timber companies still prefer to execute a Declaration of Unit Interest which the landowner / lessor affirms their interest in a unit or units based upon their calculations using publicly available data (courthouse records, unit survey plats, etc.), and then send a certified copy of same with a W-9 or letter disclosing pertinent owner information (name of agent, address, TIN) rather than sign the standard DO.

Remember, if you are in doubt as to how your interest is calculated, you can always call the lessee's owner information line and speak to someone as to how the company obtained your interest decimal.

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Permalink Reply by NA on July 15, 2009 at 7:54

Maybe I should have changed that to "I was under the impression"

I asked Barron the following what's your opinion.
If you dont sign the DO will you still recieve royalty? Also does it matter if the property is in Texas versus Louisiana DO wise?

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Permalink Reply by Dion Warr, CPL on July 15, 2009 at 10:16

NA:

As best as I understand it, there is a more compelling reason to sign the DO in TX b/c very few units are force-pooled (mostly declared or voluntarily pooled units); in LA, most if not all HA units will be force-pooled by LOC according to geographic configuration. The operator has more flexibility in TX in establishing (or gerrymandering, depending upon your perspective) the unit size and tract contribution, also most leases allow for pooling by the lessee without lessor's joinder. Therefore, the most clear fashion to establish each owner's interest with owner confirmation is through the DO.

In LA, an owner could easily derive one's interest through use of the unit survey and TO, thus confirming one's interest is generally straightforward without the DO.

In LA, it is usually not deemed as necessary to sign a DO in order to receive royalty, and the minimum standard is a confirmed address and SSN / TIN. All that being said, there are operators who will avoid the payment of royalties w/o a signed DO on file, no matter where the land is located. You can force the issue, but in either state it behooves the owner to work within the framework of the DO system and be diligent about the calculation of your interest.

I hope that this answers your question without needlessly talking all the way around it.

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Permalink Reply by NA on July 15, 2009 at 10:22

Great information. Thank you!

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