I received request for Ratification of Lease last week, then this week I received the division order on my NPRI. Timing seems off. Do they really need me to ratify if they are already sending me the division order? What are the consequences of not ratifying if I am going to be placed in pay anyway?
If the DO is correct, I would wait to see if you are put in pay status. You might want to examine the DO carefully to see if there is a requirement pertaining to the requested ratification.
I have been ratifying leases for years as I have many non-exec interests, however I have never received a bonus. On occasion I hear of bonuses being paid to the Non-Exec royalty owners. How common is this?
It would depend on the language in the original deed which created the interest. Most commonly, the seller reserves an NPRI (non-participating royalty interest) which is defined in the deed as a right to receive royalties based on a formula or a stated rate. For example, reserving 1/8 of lease royalty rate or a flat 1/64 royalty rate. Sometimes the deed will specify that one party has the executive rights to lease on behalf of the other owner but that the other owner receives his share of bonus, delay rentals and royalties.
In some states (like North Dakota), you are not required to sign division orders. I always refuse, particularly when they include junk terms like payment minimums and even worse stuff. Oil companies and their affiliates are complete crooks. They prey upon the uninformed and the elderly. Just tell them no.
Check the rules of your state. Many states do require a Division Order or a letter confirming the name, address, description of minerals, name of well and the decimal amount. Texas is one of them.
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