We own an NPRI in the Permian and received two division orders last year – one for a unit with three wells and a second for a unit with two wells. The wells were not individually listed on the first division orders, just the units. The NRI looked to be correct, so we signed and received payment. However, we recently received new division orders where the wells are now listed individually (not sure if this matters). And these new DOIs are APO whereas the original DOIs were for BPO. The NRI is the same for each well on both the old and new division orders. We asked the operator why they sent new division orders and they stated that it’s because the wells have now been “paid out”, but I’m a bit confused as to how this may affect us going forward. The NRI looks to be correct on all wells/units, just confused as to what, if any, change this will mean for us going forward as far as how we are paid. Again, the NRI is the same on both the old and new division orders, only difference is the new DOI shows the wells listed individually and the operator is saying this new DOI is because the well status switched from APO to BPO. Does the change in status from BPO to APO affect how we will get paid if the NRI is the same? Any thoughts on this would be appreciated.
This does not affect you as mineral owner. There were working interest owners (oil company lessees or unleased mineral owners) who opted not to participate and pay their share of drilling costs. Their share of costs were paid by the operator who then got to recoup all the costs out of the share of income due to the nonparticipating owners. This is BPO. Once all the costs were recouped, those owners come into pay for their share of income and costs. The payment deck (list of all royalty and working interest owners and their decimals) is adjusted among the working interests, but the royalty owner decimals do not change.
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