Guide · Texas · division orders

What should I check on this division order before I sign?

A division order is the company's sheet stating your decimal share of a well and where to send your payment. In Texas, signing a statutory division order does not amend your oil and gas lease, and the company can require one before paying you, provided the form stays within what the Texas Natural Resources Code allows.

Last checked . General information for mineral and royalty owners, not legal advice. We are independent landmen, not attorneys.

In one paragraph

Before you sign a division order in Texas, check five things against your lease and county records: (1) whether your decimal interest equals your net mineral acres in the unit divided by the total unit acreage, multiplied by your lease royalty fraction (or, for an allocation well, your tract's share of the productive lateral length); (2) whether the property description and well or unit name match the unit designation or Railroad Commission P-16 and plat; (3) whether your name, interest type (`RI` for royalty interest or `ORRI` for overriding royalty), and mailing address are right; (4) whether the form follows the statutory model in Texas Natural Resources Code § 91.402(d) or adds extra language about post-production deductions, marketing, or title warranties; and (5) whether any non-participating royalty interests (NPRIs) burdens on your tract were subtracted the way your deed requires.

How to check the decimal math

For a vertical well or a standard pooled unit where every tract shares by surface acreage inside the unit boundary, the royalty decimal comes from three numbers:

  1. Your net mineral acres (NMA) in the unit: the gross acres of your tract that lie inside the pooled unit multiplied by the mineral fraction you own. If a 100-acre tract lies entirely inside the unit and you own an undivided 1/4 mineral interest, you have 25 NMA in the unit.
  2. The total unit acres: the acreage stated on the recorded Declaration of Pooled Unit (DPU) at the County Clerk's office and on the unit plat filed with the Railroad Commission of Texas.
  3. Your lease royalty fraction: the royalty stated in your lease (such as 3/16 = 0.1875, 1/5 = 0.20, or 1/4 = 0.25), less any non-participating royalty interest (NPRI) carved out of your share by an earlier deed.

Divide your net mineral acres by the unit acres, then multiply by your lease royalty fraction. For example, 25 NMA in a 640-acre unit at a 1/4 royalty is (25 / 640) × 0.25 = 0.00976563. You can run your own numbers in the decimal check on the home page.

Pooled units vs. allocation and PSA wells

Many horizontal wells in the Permian Basin, Eagle Ford, and Haynesville cross two or more leases or existing pooled units without pooling them together. Operators drill those wells under a Production Sharing Agreement (PSA) or as an allocation well permitted on Railroad Commission Form P-16.

On an allocation well or PSA well, the operator usually calculates your tract's share using the length of the horizontal wellbore (from the first take point to the last take point) that crosses your tract or unit, divided by the total productive lateral length between the first and last take points across the entire well. If your division order decimal does not match a simple acreage calculation, ask the division order analyst for two items: the as-drilled plat showing the first and last take points on each tract, and the tract allocation worksheet showing the lateral footage assigned to your tract.

What the Texas statute allows and forbids

Texas Natural Resources Code § 91.402 governs division orders for oil and gas produced in Texas:

  • Condition for payment (§ 91.402(c)(1)): As a condition for paying proceeds from the sale of oil and gas production to a payee, a payor is entitled to receive a signed division order from the payee containing only the provisions listed in the statute.
  • Cannot amend your lease (§ 91.402(h)): The execution of a division order between a royalty owner and lessee or between a royalty owner and a party other than lessee does not change or relieve the lessee's specific, expressed or implied obligations under an oil and gas lease, including any obligation to market production as a reasonably prudent lessee. Any provision of a division order between a payee and a lessee that is in contradiction with any provision of an oil and gas lease is invalid to the extent of the contradiction.
  • Does not permanently fix an error (§ 91.402(g)): Division orders are binding for the time and to the extent that they have been acted on and made the basis of settlements and payments, and from the time that notice has been given that settlements will not be made on the basis provided in them, they cease to be binding. Division orders are terminable by either party on 30 days written notice.

Line-by-line checklist before you sign

  • Owner name and capacity: Check that your name matches the county deed or probate records. If you hold as trustee of a trust, executor of an estate, or life tenant, the capacity should be stated accurately.
  • Interest type: Royalty owners under a lease should be listed as `RI` (Royalty Interest) or `NPRI` (Non-Participating Royalty Interest), never `WI` (Working Interest, which is billed for drilling and operating costs).
  • Effective date: For a new well, the effective date is typically `"Date of First Production"` or `"First Sales."` For a transfer of ownership, it should match the effective date of your deed or the date of death.
  • Settlement terms and deductions: Compare the settlement paragraph against your lease. Under § 91.402(h), a division order cannot strip away a gross-proceeds or no-deductions clause in your lease, but it is cleaner to strike or question boilerplate deduction language before signing so the accounting deck is coded to match your lease from day one.
  • Extra clauses outside § 91.402(d): Watch for added paragraphs that attempt to grant a new right-of-way, ratify a lease that has expired, pool tracts that were not pooled under the lease, or add a general warranty of title.

What to do if the decimal looks wrong

If the decimal on your division order is smaller than what you calculated, do not guess. Write or email the operator's division order department and ask for the division order analyst's calculation sheet for your owner number and tract, including the gross tract acres, your mineral fraction, any NPRI burden deducted, the unit acreage or lateral footage factor, and the lease royalty rate used. Keep a copy of everything you send.