An oil and gas company sent me a Division Order. I had someone rewrite it and I have some questions for the forum:
How vital is it to get the Property Numbers correct? What about the Property Name? Or if I didn’t have any of those, is my Owner Number sufficient?
For EFFECTIVE DATE, is “Date of First Production” the best for me?
Within the Division Orders there are some interesting differences. Things like where the Oil and Gas Company’s has “casinghead” added seems like it would be a good thing? Theirs has "and gas" and my rewrite didn't put that in there. Under Terms of Sell, they seem to add in a large list of deductions. Can these little changes greatly effect what and how I’m paid or is it simply just more wording? Below has exactly what is written on both:
The beginning line on the Oil and Gas Company’s DO is: “The undersigned severally and not jointly certifies it is the legal Owner of the interest(s) of all the oil (including all the liquid hydrocarbons) and gas (including all casinghead and other gaseous hydrocarbons) produced from the property described on the attached Exhibit A.
Mine says: XXXXXXXX (sometimes referred to herein as “Owner”) claims, but does not warrant, that it is the legal owner of the interest set out below of all the oil and related liquid hydrocarbons produced from the property described below:”
Under “Terms of Sell” the Oil and Gas Company’s Division Order says: “TERMS OF SALE: The undersigned will be paid in accordance with the division of interest(s) set out on the attached Exhibit A. The Payor shall pay all parties pursuant to applicable state statutes regarding accumulation of proceeds and the lease or operating agreement between the parties or any other contract for the purchase of oil and gas. Purchaser shall compute quantity and make corrections for gravity and temperature and make deductions for impurities. Deductions may be made for gathering, transportation, treating, conditions, marketing and other post-production costs downstream of the wellhead and for gross production, severance or other similar taxes on production or the proceeds thereof, as allowed by applicable law.”
Mine was changed to read: “TERMS OF SALE: The undersigned will be paid in accordance with the division of interest set out above. The payor shall pay the Owner at the price provided for by the underlying Oil, Gas and Liquid Hydrocarbon Lease and in accordance with the procedures provided by the underlying Oil, Gas and Liquid Hydrocarbon Lease. Purchaser shall compute quantity and make corrections for gravity and temperature and make deductions for impurities, to the extent same are allowed by the underlying Oil, Gas and Liquid Hydrocarbon Lease.”
Thank you for any help and advice!