Division Orders Flashcards
Division Order
A legally binding document that specifies the distribution of royalty payments among the owners of mineral interests.
Royalty Owner
A person or entity that owns a share of the mineral rights and is entitled to a portion of the royalty payments.
Decimal Interest
The fractional share of ownership in a mineral interest, expressed as a decimal.
Net Revenue Interest (NRI)
The share of production or revenue from a well that a lessor or royalty owner is entitled to after deducting the royalty interest.
Working Interest
The ownership interest in a lease that bears the costs and risks of drilling and production operations.
Overriding Royalty Interest (ORRI)
A royalty interest that is carved out of the lessee’s working interest and is free of the costs of drilling and production.
Non-Participating Royalty Interest (NPRI)
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.
Suspense Funds
Royalty payments that are held in suspense by the operator until the ownership interests can be determined.
Interest Integration
The process of combining and reconciling multiple ownership interests in a property to ensure accurate royalty distribution.
Payout
The point at which the lessee has recovered the costs of drilling and completing a well from the revenue generated by the well.
Gross Proceeds
The total revenue from the sale of oil, gas, or other hydrocarbons before deductions or expenses.
Net Proceeds
The revenue remaining after deducting expenses, taxes, and other costs from the gross proceeds.
Proportionate Reduction
A method of reducing royalty payments proportionately when production from a well is not sufficient to cover all royalty obligations.
Joint Interest Billings
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.
Revenue Disbursement
The distribution of revenue from oil and gas production to the various interest owners, based on their respective ownership shares.
Escheat Funds
Unclaimed or abandoned royalty payments that are held by the state until the rightful owner can be identified.
Tax Withholding
The process of withholding a portion of royalty payments to cover the recipient’s tax obligations.
Tax Reporting
The requirement for operators and interest owners to report royalty payments and other income to relevant tax authorities.
Auditing
The process of reviewing and verifying the accuracy of royalty payments, expenses, and other financial records related to oil and gas operations.
Deductions and Adjustments
Amounts deducted from gross proceeds to account for various costs, expenses, or adjustments related to production and marketing.
Commingling
The combining of production from multiple wells or leases into a common stream or storage facility.
Balancing
The process of equalizing or reconciling imbalances in production, expenses, or ownership interests among different parties.
Well Identifiers
Unique identification numbers or codes assigned to individual wells for tracking and reporting purposes.
Operator Obligations
The duties and responsibilities of the designated operator in managing and overseeing oil and gas operations on behalf of the working interest owners.
Owner Relations
The management of relationships and communication between the operator and the various interest owners, including royalty owners and working interest owners.
State Regulations (revenue disbursement)
Laws and rules established by state agencies governing the distribution and reporting of oil and gas revenues.
Suspended Revenues
Royalty payments that are held in suspense by the operator until ownership interests or other issues can be resolved.
Minimum Royalty Payments
A clause in some leases that requires the lessee to pay a minimum royalty amount to the lessor, even if there is no production.
Revenue Deck
A comprehensive report or statement that details the ownership interests, production volumes, and revenue distributions for a particular well or lease.
Tax Withholding Calculations
The process of determining and calculating the appropriate tax withholding amounts from royalty payments based on applicable laws and regulations.
Royalty Payment Calculations
The calculations used to determine the correct royalty payment amounts owed to each royalty owner based on their respective ownership interests and production volumes.
Joint Interest Billing Statement
A statement issued by the operator to the working interest owners, detailing their share of expenses for drilling, completing, and operating a well.
Joint Interest Billing Process
The procedures and practices used by operators to bill and collect payments from working interest owners for their share of costs and expenses.
Non-Operator Billing
The process by which the operator bills and collects payments from non-operating working interest owners for their share of costs and expenses.
Audit Trail
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.
Texas Natural Resources Code
The state laws and regulations governing oil and gas operations, mineral interests, and revenue distribution in Texas.
Texas Railroad Commission
The state agency responsible for regulating the exploration, production, and transportation of oil and gas in Texas.
Texas Production Allowable
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.
