New Mexico Division Orders: A Comprehensive Overview and Types New Mexico Division Orders serve as crucial legal documents that outline the rights and responsibilities of mineral interest owners within the state. These orders are utilized primarily within the oil and gas industry, ensuring clarity and fairness in the distribution of royalty payments and ownership rights. In this detailed description, we will delve into the key aspects of New Mexico Division Orders, their significance, and the different types associated with them. The primary purpose of a New Mexico Division Order is to establish and confirm the ownership percentages of mineral interest owners in a given oil or gas well or lease. This document ensures accurate and fair allocation of the production revenues among the owners based on their respective interests. Division orders are often requested by the operator of the well or lease and are typically prepared by legal professionals or landsmen. To ensure clear identification and referencing, New Mexico Division Orders contain several key elements. They typically include the legal descriptions of the property, the names and addresses of all mineral interest owners, the specific well or lease information, and the related production and revenue details. Additionally, important terms such as the primary lease agreement, royalty interest, and decimal interest are also outlined in the document. Types of New Mexico Division Orders: 1. Individual Division Order: This type of division order pertains to single individuals who own mineral interests in a specific location within New Mexico. It outlines the percentage of ownership and the corresponding decimal interest of the individual, providing them with the necessary information for royalty payments and other related matters. 2. Joint Division Order: A joint division order is used when there is more than one owner of the mineral interests within a single well or lease. This document clarifies the ownership percentages and allows multiple individuals or entities to receive their share of revenue from the production. 3. Assignment Division Order: In certain cases, mineral interests change hands through assignments. An assignment division order ensures that the new owner receives the appropriate royalty payments and assumes the responsibilities associated with ownership. This type of division order revises the ownership and decimal interest information within the document. 4. Amended Division Order: When changes occur to the original division order due to various circumstances such as changes in ownership, lease agreements, or production volumes, an amended division order is issued to reflect these modifications accurately. It ensures that the ownership percentages and decimal interests are updated and align with the current state of affairs. In conclusion, New Mexico Division Orders are essential legal instruments used in the oil and gas industry to regulate the distribution of royalties and establish ownership rights. These documents bring clarity, fairness, and accountability to mineral interest owners by specifying their ownership percentages and decimal interests. The different types of division orders, including individual, joint, assignment, and amended division orders, ensure that the diverse circumstances and changes in ownership are accommodated, providing a comprehensive framework for industry stakeholders.
New Mexico Division Orders
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FAQ
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.
Yes, it can be beneficial to sell your mineral rights for a fair price, even producing rights. First, sellers must be aware of the different stages of the production process. They must also know the value their minerals and royalties command in every development stage.
To put it another way the formula is: lessor's acres in unit ÷ total number of acres in unit × lessor's ownership interest × lessor's royalty percentage = lessor's decimal interest.
?To pay Lessor for gas (including casinghead gas) and all other substance covered hereby, a royalty of 3/16 of the proceeds realized by Lessee from the sale thereof.? This simply means the operator will pay a royalty of 3/16 of revenue generated from production on the property.
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.
If there is more than one mineral owner, multiply the net revenue by the fractional interest of each owner to determine their respective royalty interest.
Take, for example, a landowner who has 300 acres in a 500-acre production unit while signing an oil and gas lease of 15% royalty. Their decimal interest is calculated as follows: (300/500) × 0.15 equals 0.09, which represents their decimal interest.
You may have noticed on your check stubs an ?owner interest? or ?net revenue interest? or a ?decimal interest?. The operator will then multiply your interest by the quantity of oil and gas produced and the current price to determine your oil and gas royalty payments.