Using nadoa do form instead of payor's form

[Fred_Morris]

Finally may be getting somewhere with EOG on the Nighthawks!! Received their form of DO for the 6H through 9H but am not about to sign it - it’s worse than some of the producer lease forms. Anyway, I planned to just return a NADOA form until I ran the decimals and found that EOG was always just a little lower than I was. The difference on all four of them is .00000035 in their favor. Now that’s hardly any difference at all and I’m not going to worry about it (one of the sections must be irregular due to the unit acreage they use) but I wonder if I am opening myself up to any problems if I transfer their decimal to the NADOA form. I know what will happen if I put in my own decimal, we’ll be tied up for another year hasseling with them about it. I’m thinking it might be better to just send a letter with W9 and state that under Oklahoma law I am declining to sign their form of DO and leave it at that.

Any thoughts?

[TennisDaze]

It is not uncommon to have a small decimal difference because the oil company calculates the decimals for 100% to the owners in the deck and mineral owners calculate only their own DOI. The decimals match when there are only a few owners. Some wells have 100s of small owners and the program will round some up and some down to get to exactly 100%. I have had experience with numbers going very slightly over and under.

[Fred_Morris]

Ha, I should have remembered that from a big argument I had with a contract landman years ago. We were splitting a rental to three people, 1/3, 1/3 and 1/3, and I told him to round them all up a penny. He argued that we should only round one up and the other two down to make the total payment come out to the actiual rental amount. Swore up and down that was the way he had always done it. Course I think he came from a DO background whereas mine was rentals which is a different animal entirely!

[tim_dowd]

I won’t address your specific question, but will state a general viewpoint. Yes, a royalty owner that doesn’t want to sign a division order is probably correct that you don’t have to. some uncertainty as the Hull case happened prior to the enactment of the Production Revenue Standards Act. But, with that said, if a division order analyst is under orders not to send checks without a signed Division Order, sometimes parties may want to just sign the DO to avoid the hassle, time waste, arguing, etc. Now, on the other side, parties will argue that if they don’t have to sign a Division Order, then, by gosh, they won’t. However, others will go with the “life is too short” philosophy and just sign it, so they can get their check and spend their time doing something they enjoy. Principle v. Practicality.