Legal basis of a DO?

This may be a dumb question, but what is the contractual requirement of a DO? If the lease is the controlling document and I see no reference to signing a DO, then why must I sign it, particularly when it includes additional conditions that I’m not getting compensated for? Perhaps I’m missing something.

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The Division Order is the contractual document between the operator and the mineral owner where they agree on the decimal amount of production royalties to be sent to the mineral owner at their correct address. It is based upon a Division Order title opinion which is different than the leasing title opinion. The wording on the DO could change the lease, so you need to be careful about reading the DO to make sure that it does not. Some states like Texas require a signed Division Order to get paid. Others like Oklahoma do not. You just need to return a signed W-9. You can change the minimum payment to a lesser amount such as $25 by sending written notice. Again, it depends upon the statutes of the particular state.

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I’m in NM. I’ve asked for copies of the DOTO to verify the decimal interest and, if the operator is different than the lessee, the operating agmt or other agmt that put the operator in their position. In one case I received this and was able to verify everthing, but it was reluctantly provided. In the second case, the lessee was the operator was the same, so I asked for the DOTO, which they refused to provide. So they simply agreed to pay without a DO. Just seemed weird.

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My request is that anyone that is trying to figure out a DO, have a competent lawyer handy to read it for you. I had a lawyer read one for me because I am 80 years old and my thinking skills aren’t as good as they once were. As it turns out, the lawyer did not tell me that if I signed the DO I would be signing over 3/4ths of my royalties to the person in charge of the water jet procedure they wanted to do to the well. Before, I was receiving $300+ to $750+ a month. Now I’m lucky to get $120 every few months. Get the advice from a lawyer, and do not trust anyone.

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Wells naturally decline over their lives as the pressure drops off and the fluids are extracted. Combining the natural decline with a change in product prices will affect royalties. Decline with lower product prices like the last year or so will show up as much lower royalties. Normal.

It is not an industry practice to provide a copy of the DOTO to a party that did not pay for the production of the opinion. You may get a Purchaser that will provide you with an excerpt as it relates to a title requirement; although, they generally will just provide the requirement. DOA’s make mistakes and attorneys do not always get it right, but the burden of proof will generally fall to you if you propose an alternate ownership.

Thx for the response, and I’m aware that DOTO’s are considered proprietary, although that wasn’t the case in the past. Is a ‘paying party’ solely a party to the Operating Agmt? If you own an override, are you considered eligible to receive the DOTO since you are o the lessee side of the ledger?

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I am aware of the amount coming out of the ground getting smaller over time. What I said was that the decimal amount changed once that DO was signed by me. I was not aware of this and when the lawyer I hired finished reading it he never made me aware of the change.

If you have a copy of the first DO and the royalty statements reflect a lesser decimal, then send a copy of the first DO back to to the Operator and let them know about the error and ask them to revert to the original DO or explain why they changed it as they are only supposed to use a signed DO. If they changed without your signature, then there is a problem.

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Since Oklahoma does not require a signed DO from the mineral owner, the mineral owner still gets a copy of the DO, correct?

Yes, the operators do get a copy. You still need to return a W-9 to the operator. You can send a letter in lieu of the DO. There is a topic string regarding several templates.