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Permalink Reply by DONNA M SELLERS on April 27, 2015 at 1:34am

Yes they send them out. But mine came from Rice because they bought my well from CHK. My well was already producing. There is no set time on DO s. Depends on a lot of factors.

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Permalink Reply by 0ym9x5ag7ury2 on April 27, 2015 at 1:31pm

Buck Well 1H & 6H landowners received their Division Order in June 2014 then we received the Chesapeake Royalty Theft, I mean Royalty Statement in July.

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Permalink Reply by D Gates on April 28, 2015 at 3:34am

What is a Division Order?

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Permalink Reply by Philip Brutz on April 28, 2015 at 4:33am

D Gates,

Oil and Gas Lease and Division Order Conflicts
By Kathleen Dotzel Knight, Attorney

"With the boom in natural gas wells, you can bet there will be as big a boom in oil and gas litigation. One area where increased litigation is expected is in disputes over the payment of royalties resulting from conflicts between the oil and gas lease and the division order. Because division orders are not issued until there is actual production, mineral owners and operators sometimes forget to address the particulars of division orders when negotiating a lease. This is a mistake.
Division orders are revocable contracts directing the distribution of proceeds from the sale of oil and gas. Using a title opinion as a basis, division orders set out the fraction of production each party is entitled to receive. Each interest owner will be asked to sign the division order before the first royalty check is issued. Sometimes the division order contains terms that are either not in the lease agreement or are different than the lease agreement and can be less favorable to the owner. The owner should carefully review a division order before signing it. If the owner signs the division order, it is a binding agreement and, while in effect, will take precedence over the lease.
If the owner refuses to sign the order, the operator may withhold royalties. In an attempt to avoid conflicts this situation creates, Texas passed a law that provides that a payee may be required to sign a division order as a condition to receiving payment if the payor 1) uses a form that contains only certain listed provisions or 2) uses the model division form set out in the statute.[ii] The producer cannot withhold royalty payment solely on the basis of an owner?s refusal to sign a division order that is not in compliance with this statute.[iii]
Although this law has provided some stability, open issues persist. While it states that a division order can never permanently amend or supplant a lease, case law exists that holds that the division order will control while in effect.[iv] Also, even though the law specifically states that any provision in the order that is contradictory to the lease is invalid to the extent of the contradiction, it then allows that the order may be used to ?clarify royalty settlement terms.?[v] So this leaves open to interpretation when something would be considered ?contradictory? vs. supplemental or clarifying.
The statute confuses things even more when it defines ?market value,? ?market price,? ?prevailing price in the field?or other such language when used as the basis of a valuation in the lease as "the amount realized at the mouth of the well by the seller of such production in an arms length transaction." The problem is that this definition is contra to Texas case law which consistently maintains that these terms are not the same. ?Proceeds? or ?amount realized? requires the royalty to be measured based on the amount actually received by lessee. By contrast a ?market value? or ?market price? clause bases royalties on the prevailing market price for gas irrespective of the actual sales price.[vi] So a division order, if interpreted in accordance with this statute, may well alter the valuation method agreed to in the lease.
Because of the ambiguity surrounding these issues, it would be wise to sort out these matters when negotiating the lease. At a minimum the lease should provide that 1) any division order issued will not change the royalty valuation method defined in the lease, and 2) that the signing of a division order that in any way alters the terms of the lease will not control nor temporarily amend the original lease.
If careful attention is given to setting out details of division orders at the lease drafting stage and the owner does a careful review of the division order before signing, these disputes can be avoided."

Here is the link to the National Association of Division Order Analysts Division Order Form:

http://www.nadoa.org/index-4.html

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Permalink Reply by D Gates on April 28, 2015 at 1:06pm

Mr. Brutz - Thank you.  Another item missed in my research.  Hope I don't get burned too bad.  Too many loopholes in this game.

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Permalink Reply by Bill Bergseid on May 3, 2015 at 4:04pm

This is the law in Texas, but I don't believe this is correct for Ohio.

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Permalink Reply by Bill Bergseid on May 3, 2015 at 4:02pm

Many states (including Ohio I believe) do not require royalty owners to sign division orders in order to be paid royalties.  Some states, like Texas (with the language quoted in this thread), do require a division order for payment.  In a state, like Ohio, that doesn't require a division order for payment, you can delete all the offensive language so that your division order just provides your name, address, and (if you can verify it) your decimal interest.

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Permalink Reply by Dave C on May 7, 2015 at 2:45am

If I remember correctly on Bigfoot (Belmont Co Ohio) we received our division orders the beginning to middle June. Well went into production the end of June and we received our first check the first week of September.

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Permalink Reply by KAS on August 16, 2015 at 5:17am

We went into production May 22nd and received our division orders July 27th.  It is August 16th and we haven't received a check yet, but our neighbor already got his for the week or so in May it was producing.  

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