Is it necessary to sign a DO as an unleased mineral owner? This pertains to a well in TX that has already been paid out. They are currently holding the revenue until we sign a DO.
Also, since we do not have any agreement/lease, it appears the language in the DO would stipulates how the Oil is to be delivered (FOB) along with their methods of measurements and computations for pricing and volume.
Any advice for our situation?
Thank you!
The purpose of the DO is for you to verify your DOI in the well as basis for payment. As you are unleased, you will be treated as a working interest owner. The DOI should be your Gross Revenue Interest (8/8 of revenues for your unleased minerals) and then you will receive JIB (joint interest billing statement) for your share of well costs going forward. The oil company will also require a W-9 for your social security number for tax reporting. You will receive a 1099-NEC and report the income and expenses on Schedule C as earned income.