Division Orders

Question 1

Division Order

Answer 1

A legally binding document that specifies the distribution of royalty payments among the owners of mineral interests.

Question 2

Royalty Owner

Answer 2

A person or entity that owns a share of the mineral rights and is entitled to a portion of the royalty payments.

Question 3

Decimal Interest

Answer 3

The fractional share of ownership in a mineral interest, expressed as a decimal.

Question 4

Net Revenue Interest (NRI)

Answer 4

The share of production or revenue from a well that a lessor or royalty owner is entitled to after deducting the royalty interest.

Question 5

Working Interest

Answer 5

The ownership interest in a lease that bears the costs and risks of drilling and production operations.

Question 6

Overriding Royalty Interest (ORRI)

Answer 6

A royalty interest that is carved out of the lessee’s working interest and is free of the costs of drilling and production.

Question 7

Non-Participating Royalty Interest (NPRI)

Answer 7

A royalty interest that is carved out of the lessor’s royalty interest and does not bear any share of the costs of drilling and production.

Question 8

Suspense Funds

Answer 8

Royalty payments that are held in suspense by the operator until the ownership interests can be determined.

Question 9

Interest Integration

Answer 9

The process of combining and reconciling multiple ownership interests in a property to ensure accurate royalty distribution.

Question 10

Payout

Answer 10

The point at which the lessee has recovered the costs of drilling and completing a well from the revenue generated by the well.

Question 11

Gross Proceeds

Answer 11

The total revenue from the sale of oil, gas, or other hydrocarbons before deductions or expenses.

Question 12

Net Proceeds

Answer 12

The revenue remaining after deducting expenses, taxes, and other costs from the gross proceeds.

Question 13

Proportionate Reduction

Answer 13

A method of reducing royalty payments proportionately when production from a well is not sufficient to cover all royalty obligations.

Question 14

Joint Interest Billings

Answer 14

The process by which the operator bills the working interest owners for their share of the costs associated with drilling, completing, and operating a well.

Question 15

Revenue Disbursement

Answer 15

The distribution of revenue from oil and gas production to the various interest owners, based on their respective ownership shares.

Question 16

Escheat Funds

Answer 16

Unclaimed or abandoned royalty payments that are held by the state until the rightful owner can be identified.

Question 17

Tax Withholding

Answer 17

The process of withholding a portion of royalty payments to cover the recipient’s tax obligations.

Question 18

Tax Reporting

Answer 18

The requirement for operators and interest owners to report royalty payments and other income to relevant tax authorities.

Question 19

Auditing

Answer 19

The process of reviewing and verifying the accuracy of royalty payments, expenses, and other financial records related to oil and gas operations.

Question 20

Deductions and Adjustments

Answer 20

Amounts deducted from gross proceeds to account for various costs, expenses, or adjustments related to production and marketing.

Question 21

Commingling

Answer 21

The combining of production from multiple wells or leases into a common stream or storage facility.

Question 22

Balancing

Answer 22

The process of equalizing or reconciling imbalances in production, expenses, or ownership interests among different parties.

Question 23

Well Identifiers

Answer 23

Unique identification numbers or codes assigned to individual wells for tracking and reporting purposes.

Question 24

Operator Obligations

Answer 24

The duties and responsibilities of the designated operator in managing and overseeing oil and gas operations on behalf of the working interest owners.

Question 25

Owner Relations

Answer 25

The management of relationships and communication between the operator and the various interest owners, including royalty owners and working interest owners.

Question 26

State Regulations (revenue disbursement)

Answer 26

Laws and rules established by state agencies governing the distribution and reporting of oil and gas revenues.

Question 27

Suspended Revenues

Answer 27

Royalty payments that are held in suspense by the operator until ownership interests or other issues can be resolved.

Question 28

Minimum Royalty Payments

Answer 28

A clause in some leases that requires the lessee to pay a minimum royalty amount to the lessor, even if there is no production.

Question 29

Revenue Deck

Answer 29

A comprehensive report or statement that details the ownership interests, production volumes, and revenue distributions for a particular well or lease.

Question 30

Tax Withholding Calculations

Answer 30

The process of determining and calculating the appropriate tax withholding amounts from royalty payments based on applicable laws and regulations.

Question 31

Royalty Payment Calculations

Answer 31

The calculations used to determine the correct royalty payment amounts owed to each royalty owner based on their respective ownership interests and production volumes.

Question 32

Joint Interest Billing Statement

Answer 32

A statement issued by the operator to the working interest owners, detailing their share of expenses for drilling, completing, and operating a well.

Question 33

Joint Interest Billing Process

Answer 33

The procedures and practices used by operators to bill and collect payments from working interest owners for their share of costs and expenses.

Question 34

Non-Operator Billing

Answer 34

The process by which the operator bills and collects payments from non-operating working interest owners for their share of costs and expenses.

Question 35

Audit Trail

Answer 35

The documentation and records maintained by operators and interest owners to support and verify the accuracy of revenue distributions, expenses, and other financial transactions related to oil and gas operations.

Question 36

Texas Natural Resources Code

Answer 36

The state laws and regulations governing oil and gas operations, mineral interests, and revenue distribution in Texas.

Question 37

Texas Railroad Commission

Answer 37

The state agency responsible for regulating the exploration, production, and transportation of oil and gas in Texas.

Question 38

Texas Production Allowable

Answer 38

The maximum amount of oil or gas that the Texas Railroad Commission allows to be produced from a well or reservoir during a specified period.