Division Order Information

A Division Order form is a communication tool. It is sent by an oil and gas company to confirm ownership in a well or wells. It will indicate the well name, location, production and interest type, decimal interest owned in the property’s production, the owner’s name and address along with a section for the owner to provide contact information and a Social Security (SSN) or Tax ID (TIN).

The owner should review all information on the form, confirm its accuracy, provide phone number and email address, SSN or TIN, then sign and return the form. If your address is incorrect, please cross it out and handwrite the correct address. If you disagree with other information, please contact PDC.

Suspended funds will be released upon receipt of the document unless the owner’s Lease states a signed Division Order is not required prior to payment or additional documentation is needed to cure a title requirement.

Please note Federal Law requires you to provide your SSN or TIN. Failure to comply will result in 24% tax withholding and will not be refundable by Payor.

A Division Order cannot amend the lease.

Before PDC drills a well, we must confirm who owns legal title to the surface and minerals of the lands. To do this, a review of the County records is conducted, then an attorney reviews these documents and creates a Title Opinion. The Title Opinion lays out each owner, their type of ownership and proportions of each so that PDC can determine who is due royalty payments for the oil and gas produced by the well.

Royalties are payments made to the mineral owner under the terms of a lease and their proportionate ownership of minerals produced by a well.

Interest types are represented by the following codes:

  • Royalty Interest (RI) – This is the mineral interest owner’s compensation under their oil and gas lease for production. This interest is free from operating costs but can be subject to various taxes and post-production expenses.
  • Overriding Royalty Interest (OR) – A royalty interest carved out of the lessee’s (Working Interest) leasehold interest. As with the Royalty Interest, Overriding Royalty is generally free from any operating costs but can be subject to various taxes and post-production expenses.
  • Working Interest (WI) – Working interest is the right to explore for and produce the mineral interest granted by an oil and gas lease. The Working Interest parties are responsible for operations on the property pay for the costs of drilling, completing, and operating the well. This can also be called Leasehold Interest or Operating Interest.
  • Non-Participating Royalty Interest (NR) – Also a Royalty Interest, but this owner does not receive any lease bonus payments or rental payments and does not have the authority to make decisions regarding the lease.

If you own a 10% mineral interest in a 20-acre tract that is included in a in a 640-acre spacing unit, and your lease provides for an 1/8th royalty rate, your decimal interest is 10% x (20/640) x 1/8 = 0.000390625.

PDC is required to pay royalties based on recorded documents found in the County records. Therefore, documents pertaining to your mineral interest must be recorded in the county where the well(s) are located.

Royalty payments are suspended for a number of reasons. A few examples are:

  • Title Dispute/Requirements
  • Death of an owner
  • Sale/Transfer of property
  • Incorrect Address
  • Estates not probated in the state where the well is located
  • Unrecorded Documentation
  • Unsigned Division Order

Due to the many variables involved in determining the estimated value of a property, PDC does not provide such valuations.  An oil and gas land broker in the area where the property is located may be able to provide this type of valuation.


 

DISCLAIMER:  Each royalty interest is governed solely by the language in the individual written agreement between PDC Energy and the royalty owner.  Nothing in this document will amend the language in your written agreement concerning royalties or grant any rights to royalty holders.