Is it common now In Texas for new division orders to not be required when ownership is transferred?
Years ago it seemed like most companies required you to sign a DO, but now many are not. I am not talking about new wells; just transfer of ownership of existing production.
Just wondering what others’ experiences are with this?
The Division Order is already in place. It’s been signed and is in effect. Transferring ownership of the interest it is regarding would / should only require a Transfer. Kinda like how Banks Transfer Deeds of Trust. They don’t require new Deeds of Trust. Simple “Paper” Trades.
With all respect, that’s not correct. When a transfer takes place, the oil company will need a new division order in the name of the transferee or grantee. With deeds of trust, lenders may not use a new deed of trust but there will be an assignment and assumption document that incorporates the deed of trust by reference.
It depends on whether the lease requires division orders and on the policy of the specific oil company. In my practice, I have not noticed any decrease in the use of division orders. In fact, I handle a lot of transfers for clients and it has been extremely rare that a division order is not required.
We as royalty owners are frequently cautioned to be careful about signing division orders (or use the model DO), but are there any situations where a division order would be good for us? In other words, should we ever be concerned about not receiving a DO?
You should always receive a new division order when you transfer ownership. Generally speaking, if you have not received a division order the proceeds are still being paid to the previous owner or the monies are in suspense. You should also check your division order to ensure that the decimals reflected on the order correctly match your interests.
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