Colorado Division Order refers to a legal document that outlines the distribution of revenue generated from the production of oil, gas, and other minerals in the state of Colorado. It plays a crucial role in the oil and gas industry by establishing each party's interest and entitlement to the proceeds from the production activities. The Division Order is typically created following the successful drilling and completion of a well and serves to facilitate the proper allocation of royalties among the owners of mineral rights. There are primarily two types of Colorado Division Orders: the Standard Division Order and the Modified Division Order. 1. Standard Division Order: The Standard Division Order is the most commonly used type in Colorado. It typically contains clauses that define the interest owners' decimal interest, details about royalty payments, and the operator's responsibilities in terms of payment distribution. 2. Modified Division Order: The Modified Division Order is a customized version of the Standard Division Order. It is used in situations where deviations from the standard provisions are required to address unique circumstances. These modifications could include changes in royalty rates, payment schedules, or other specific arrangements agreed upon by the parties involved. The primary purpose of Colorado Division Orders is to establish a clear framework for the equitable distribution of royalties and to safeguard the rights and interests of all parties involved. By providing comprehensive information on fractions or decimal interests, well locations, tract descriptions, and other pertinent details, the Division Order ensures accurate and timely payment to each owner. Keywords: Colorado Division Order, revenue distribution, oil and gas industry, mineral rights, royalties, Standard Division Order, Modified Division Order, decimal interest, payment distribution, equitable distribution, rights and interests, fractions, decimal interests, well locations, tract descriptions.
Colorado Division Order
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FAQ
As a general rule of thumb, the mineral rights value in Colorado for leased mineral rights is 2x to 3x the total amount of your lease bonus. For example, if you leased your mineral rights for $100,000 you could expect to sell for $200,000 to $300,000.
The mineral owner's interest in the spacing unit is calculated by dividing the number of acres owned by the mineral owner within the unit by the total number of acres in the unit (Acres Owned / Total Acres in Unit). This will result in a decimal.
Selling means that you can receive a large cash payment upfront, regardless of minerals found on your land. A company who leases your land may deplete the mineral supply substantially before returning the land back to you. Selling reduces overall risk of handling mineral rights.
Severed mineral interests are considered real property in Colorado law, and as such are subject to taxation.
The owner of the Mineral Estate has the right to use a reasonable amount of the surface to explore for oil and gas or grant a lease to an oil and gas company. In Colorado, it's common for surface rights and mineral rights to be severed and owned by different people.
A Division order is an instrument that records an owner's interest in a specific well. It should include the name of the well, the well number, interest type, and your decimal interest.
A division order is a contract between you and the operator (an oil and gas company). Typically, receiving a division order means that the operator is about to drill, or that the operator has already drilled a well and your minerals are producing.
To calculate the NMA, you need the gross number of acres and the percentage of your mineral interest. To complete the calculation, simply multiply the gross acreage by your mineral interest. For example, if you owned 25% interest on the minerals under a 400-acre tract of land, you would have 100 NMA.