Legality of Division Orders

Our family has received a division order for C24 Section 17 in Loving County. It is dated June 29, 2017 and states that production is "projected" to occur in September 2017. When I look at the Texas Railroad Commission site, it says that this well has not been spud, much less completed.

Is this legal?

My understanding is that companies cannot send out division orders until the well has been completed and production is under way. (I suspect this division order was sent out to protect the lease by suggesting that drilling was occurring before the lease term ends.)

Any guidance on this question would be appreciated.

John Michael Moran

This is a new one for me but if the operator has the production unit in place, getting the division order executed now should eliminate the usual delay in receiving royalty payments.

Mr. Moran:

I saw your recent post directed to Lawrence. In particular, I don't believe you mentioned Sec. 17, Blk. C24. Were one or more wells ever drilled on your acreage there? As a retired exploration geologist and E&P Co. CEO, I cannot imagine having prepared and sent out division orders prior to establishing production on a lease. Sending out division orders will in no way substitute for spudding a well, which is well documented by the TRC.

All the best,


Hello Ken, We just received word from Matador that there was a point of sale, I believe the term is, in mid-October for oil and gas drilled in C24 Section 17. It took a long time for us to get here as the division order was June 29, 2017. I still don't know if Matador sent us the division order then to prevent us for looking at other lease offers since the three year term was about to expre