A Division Order is important, a Division Order department is essential, and Division Order Services are one of the ways Pettigrew & Pettigrew Land Services is distinguished from other land service and lease administration companies.
Sending out Division Orders is a small, but important, part of what we do; DO work is so much more than just sending and receiving that one document.
First, a Division of Interest (DOI) deck must be set up. Sometimes DOI decks are received from landmen, sometimes DOI decks are received from accounting personnel, and many times DOI decks are generated by P&P using lease, tract, and well data (such as lease working interest, lease royalty rate, or tract mineral interest to name a few) that is already setup in client databases we manage. To ensure accurate Division Orders these DOI decks are then cross-referenced to Title Opinions, Unit Designations, and other information. The foundation of a proper Division Order is the Interest Calculation, which can be quite complex. This verification process ensures that landowners receive the proper share of production and that producers make payments in the correct amount to the right people. Often times during this stage a Division Order Analyst will begin to encounter transfers of interest that have already occurred, such as when a mineral owner has passed away and their estate is probated. These realizations then result in updates to the DOI deck, land administration database, and lease files. As addresses are corrected, ownership is updated, and the DOI deck verification process is completed, customers are kept abreast of the situation through a reporting and approval process. Accounting records are then updated by P&P, the operators in-house accounting department, or other third-party accounting firm; unlike raw lease data, Division Order information is needed by personnel outside of the land department.
Once a DOI deck is established with confidence, Division Order Packets can then be mailed. A Division Order, with cover letter and request for supporting documents if needed (curative), is sent on behalf of the producing party to all interest holders, primarily working interest partners and landowners with a royalty interest in production. The Division Order will contain a Unit Description, Well Name, the Net Revenue Interest (NRI) the addressed party is calculated as receiving, and any other fields required for the Division Order to be compliant with state regulations. The person or company receiving the Division Order can then verify their NRI; keeping one copy of the Division Order for themselves, and returning a signed copy of the Division Order to P&P or the operating company. Sending and receiving of the Division Order is tracked by P&P and Owner Relations begins to play a larger role. DOI decks are updated as executed Division Orders are received. Each state can have different statutes regarding Division Orders and how their handling can affect the Pay Status of a party on a DOI deck; P&P stays current with these changing regulations.
After Division Orders have been received and the DOI deck has been updated to begin payments, accounting can begin cutting checks! At this point the focus shifts from Division Order preparation to DOI maintenance. During the DOI maintenance period the Division Order Analyst will need to perform transfers of interest in the event of death, divorce, sale, or some other type of conveyance; possibly in tandem with other Lease Maintenance duties. The Division Order Analyst will also update existing records when parties move or other correspondence dictates necessary changes. All these transactions are reported to, and approved by, the producing company – while P&P is able handle the owner relations on their behalf if desired.
If you are in need of Division Orders services call us and let us see how we can help meet your Division Order needs!