So, you receive a division order in the mail from an oil and gas company related to Marcellus Shale or Utica Shale oil and gas production in West Virginia. You may be asking, “What is this confusing, fractional decimal interest set forth within the division order? What does it mean? What is its purpose? Where did it come from, I thought I already executed a lease agreement with the oil and gas company?”

The short answer is that the percentage set forth on the Division Order received from an oil and gas operator represents the oil and gas company’s percentage calculation of your royalty interest in the tract, pool or unit on which the horizontal well is drilled – and it is the document which will govern the payment relationship, in part, between the mineral royalty holder/owner and the oil and gas company on a forward basis – over the lifetime of production from a horizontal oil and gas well.

The long answer is that the division order is one of the most important documents that a mineral owner/West Virginia oil and gas royalty owner executes in relation to oil and gas production – as it plays a substantial role in determining a future stream of royalty payments associated with a mineral interest in a specific tract, pool or drilling unit.
Within this context, when you receive a division order, you should contact a West Virginia oil and gas lawyer to determine that the decimal/fractional interest set forth by the oil and gas operator on the division order is correct, and to review the additional terms and conditions set forth within the oil and gas division order which may, or may not, have been in the parties’ original oil and gas lease agreement.