My wife and her sisters signed a Division order that covers two wells in La Salle County, they have received 2 checks, each check covered both wells for that production period.
Now EOG has sent them revised Division Orders which now puts each well on a separate report and have given each well a very slight reduction in the Decimal Interest (and each well has a different DI, whereas they had been the same).
MY QUESTION IS:
Is it normal to receive these Revised Division Orders, and what kinds of things would change the DI ?
There have been no change in number of Sisters, and is it normal for each well to have a different DI.
As you can tell, we are very new to this and the girls are all asking why.
HELP :)
From the number of views and no responses, I suppose I wasn't very clear on my question....so I'll try again.
Is it unusual to receive Revised Division Orders?
If it's not unusual, what usually triggers it?
Thanks in advance for enlightening us...or advising how to get the info without going to the source of the requests.
I am one of the viewers with no response - without being a land person or title person, I am hesitant to put out an idea as to what is happening. My personal experience with revised DO was tied to the operator uncovering more info on the actual ownership in the unit and then having to revise the DO accordingly.
Thanks Rock Man, Our situation will probably be the same as your personal experience but since we don't know how often this happens and no explanation was sent with the revision paperwork, the girls were wondering if they need to be concerned or take any steps before signing and returning the paperwork. I sincerely appreciate your reply.
Rock Man said:
I am one of the viewers with no response - without being a land person or title person, I am hesitant to put out an idea as to what is happening. My personal experience with revised DO was tied to the operator uncovering more info on the actual ownership in the unit and then having to revise the DO accordingly.
You should not sign a division order if you do not know how the operator calculated the royalty decimal. There are various reasons why a decimal can change, such as revised survey which changes the unit acreage, adding or subtracting acreage from the unit, or allocating all or part of a NPRI burden against your minerals. It can also be due to a mistake. You should contact the division order analyst at EOG and ask for the calculation and for a copy of the drilling title opinion, at least as it pertains to your mineral ownership. Your post raises a particular question as you say the DOI was identical for the wells and is now different, in addition to the overall changes.
Thank you TennisDaze, appears we have some more research to do before signing. I appreciate your input.
I am a professional division order analyst with over 35 years of experience. The answer to your first questions is yes, it is normal to receive revised division orders, however, it is not normal for the revised division order to be mailed to you without a cover letter explaining the reason for the change. You need to call the Royalty Owner Relations hotline at EOG and tell them to explain what caused the change.
The answer to your second question asking what usually triggers it, there are two main reasons why a division order can be revised: mistake and revision in the shape or size of the pooled unit (if one is involved).
Sometimes a mistake can be traced to the title attorney who prepared the original title opinion upon which the DI was based. When the mistake was discovered, the title attorney would have revised his or her title opinion, causing the DI to get revised. An example of such a mistake would be for the attorney to be provided a missing document not provided when the opinion was first rendered, and that document shows that a non-participating royalty interest owned by someone else needs to be carved from the royalty decimal previously credited. Sometimes a mistake is made by the division order analyst who uses the title opinion to set up the DI and issue division orders from it. Some division order analysts are more experienced and skilled at analyzing title opinions and converting them into a division of interest.
If the wells covered by the division order are all producing from a pooled unit, then it is possible that the size or shape of the pooled unit has changed and the sisters' interests were changed because some of the acreage in the sisters' lease got removed from the unit. There are many valid reasons why this happens, such as regulatory restrictions.
What is needed here is a full explanation by EOG to you (or your wife, actually) of exactly why the decimal decreased in the revision. Keep in mind that until the division order is signed and returned, EOG may have a policy to withhold payment, so you need to contact them right away to get their explanation of the change.