Virginia Division Orders are legally binding documents that outline the distribution of proceeds from the production of oil and gas in the state of Virginia. These orders play a crucial role in ensuring fair and accurate allocation of revenue among the various interest owners in a specific oil or gas lease. The purpose of a Virginia Division Order is to establish the rights, responsibilities, and obligations of both the operating company and the interest owners. It specifies the decimal interest owned by each party and the proportional share of revenue they are entitled to receive. The Division Order also outlines the terms for payment and provides instructions for updating ownership information as it changes. There are different types of Virginia Division Orders, which include: 1. Mineral Interest Division Orders: These orders are issued to mineral owners who hold the rights to the minerals beneath the surface of the land. They are entitled to a share of the royalties and other benefits generated from the production of oil and gas. 2. Royalty Interest Division Orders: Royalty owners are individuals or entities who own a share of the revenue generated from the production of oil and gas, but do not have any operational or exploration responsibilities. The royalty interest is usually a percentage agreed upon in the lease agreement. 3. Working Interest Division Orders: Working interest owners are parties who actively participate in the exploration, development, and production of oil and gas wells. They bear a proportionate share of the costs and receive both royalties and a share of the profits generated. The issuing and execution of Virginia Division Orders require accurate ownership information, which is obtained through thorough title examination and certification. It is crucial for all parties involved to carefully review and understand the terms and conditions outlined in the Division Order to ensure fair distribution of revenue and avoid any disputes or discrepancies. In summary, Virginia Division Orders are essential documents that establish the rights and obligations of parties involved in the production of oil and gas in the state. They ensure fair and accurate allocation of revenue among different interest owners, including mineral owners, royalty interest owners, and working interest owners. By specifying ownership interests and payment terms, these orders help maintain transparency and facilitate smooth operations in Virginia's oil and gas industry.
Virginia Division Orders
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How to fill out Virginia Division Orders?
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FAQ
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.
Traditionally, a tract of land where an oil or gas well is drilled and located. With the advent of horizontal drilling, it now includes any tract that is traversed by a horizontal well.
The payor may not require a division order, however, that requires much more than is necessary for it to verify the interest you claim to be entitled to. You may insist that the payor submit a division order containing no more than is required by Texas law.
The division order describes the minerals, it asks for information about yourself, and often asks you to agree to certain things related to the payment of royalties. But beware, in Oklahoma you are not required to sign and return a division order. In fact, you may be unnecessarily impairing or giving away your rights.
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.
A Division Order is an instrument which sets forth the proportional ownership in produced hydrocarbons, including crude oil, natural gas, and NGL's. Sometimes the Division Order is referred to as a division of 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.
The Division Order is a document whereby the revenue distributor (either the Operator or the 1st Purchaser) and the recipient (the royalty owner) agree on the exact decimal interest (Net Revenue Interest or NRI) owned within a well, lease, production unit, or field-wide unit.