I own some mineral rights under Endeavor Energy in Midland County. There are two wells that have been producing for almost an entire year (11 months) and I have yet to receive a division order for this interest. I had emailed back and forth with the division order analyst and they say that they are working on the revenue decks. Does this seem normal for an operator to be this far behind on royalty payments? I would expect 3-6 months behind but not 11 months. Any feedback would be greatly appreciated.
I’m a Division Order Supervisor, and require my analysts to set up the division of interest (revenue deck) for a new well within 30 days of the well being turned to sales. Of course, there are exceptions to that, but a well-managed division order department will minimize those exceptions.
One strategy my department uses is to begin analyzing title as soon as the well is spud. The DO analyst at Endeavor should have been receiving daily drilling reports, and if not, their supervisor should be requiring the operations department to add his/her analysts to the daily distribution list. DO analysts ideally use a title opinion (a division order title opinion, in a perfect world) written by a title attorney contracted by the company to write opinions for them. The time period of courthouse records reviewed by the attorney for writing the opinion must overlap the date of first production. In other words, it can begin documents of record in 1922, for example, but must review all documents through the date of first production. If it falls short of date of first production, the DO analyst must ask their in-house Landman (the one in charge of the area where the well is located), or appropriate employee if the company’s workflow is different, to have a field broker run title from the cut-off date in the opinion up through the date of first production (a “run sheet”). This will capture any documents filed of record changing ownership between the title opinion review cut-off date and date of first production (DOFP).
At the very least, can the DO analyst at Endeavor tell you where he/she is, in the process of completing the initial division of interest for the well? Have the title opinions been ordered (could be lease-by-lease or tract-by-tract title opinions which must be cobbled together, if no division order title opinion is being specially written)? Or is the DO analyst being expected to filter through hundreds of pages of abstract, to create the DOI directly from the abstract (no opinions)? Believe it or not, there are too many companies requiring just that, to save the expense of a title opinion. Does the analyst they have all of the opinions (or other title records), but the complexity of the title, together with title requirements, is what is causing the holdup?
If they have title opinions, at the very least a revenue deck can be created crediting all owners with “clear title” with a decimal, and get their division orders issued to them. Eleven months is too long. You deserve to know if your mineral interest or royalty rights interest has some kind of title problem that needs to be cured before you can be paid. If that’s the case, though, you should have received a letter telling you the exact nature of the problem and what document(s) you need to furnish to clear it up.
Hope it all gets straightened out soon.