What is a Division Order?

Mineral rights are the rights to the hydrocarbons and other natural elements that naturally occur in a plot of land. For people that own several acres, leasing or selling mineral rights can be a lucrative financial decision. When an individual is interested in leasing their mineral rights, they may sign a division order to protect their existing rights and to ensure proper payment by the mineral rights lessee. It shows a schedule of how mineral revenues are divided between the owner of the mineral rights and the oil and gas company. There is often a negotiation between the purchaser and the lessee to give both parties a satisfactory arrangement. In some cases, a single well that oil or gas is drawn from will have more than one owner. This means that some division orders include multiple parties sharing ownership of mineral rights.

Content of a Division Order

Due to the complex nature of mineral rights, it is important to have all agreements and arrangements in writing. A division order is one way to ensure that you are properly paid for the appropriate rate originally agreed on. A division order will often include the following stipulations:

  • Terms of the lease
  • Royalty rate
  • Any bonuses
  • Terms if a delay occurs
  • “Shut-In royalty” agreements

By hiring a mineral auction representative, you will be able to find competitive buyers that are willing to offer higher rates for your mineral rights. A broker will be able to walk you through the mineral rights process and work with you to find the best situation for your land.

Contact a Mineral Auction Representative Today

Selling or leasing your mineral rights may offer a beneficial financial situation for you. If you own mineral rights and are unsure if you should work with an oil or gas company to mutually benefit from your land, contact a mineral auction representative at The Mineral Auction. For more information, call (512) 698-2802 today.

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