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Royalty Clerk

Texas division orders

The division order: sign what the law allows.

Before a payor pays you, it may ask you to sign a division order. Texas lists exactly what that document may contain. Anything beyond the list, you can strike, and the payor may not hold your money for it.
See a marked-up sampleCheck my decimal

Read every clause. Most are fine. Some are not.

A DIVISION ORDER MAY CONTAIN ONLY:

§91.402(c)
  1. The effective date
  2. A description of the property and the type of production
  3. Your decimal or fractional interest, the type of interest, your title certification, and (unless agreed otherwise) a promise to give one month's notice of a change and to repay the payor if you turn out not to own it
  4. Permission to suspend payment during a title dispute
  5. Your name, address and taxpayer ID
  6. How production is valued and when settlements are made
  7. A notice that you may have other statutory rights

Anything else: you may refuse it.

What the law says

What section 91.402 lets a division order do

A payor may require a signed division order as a condition of paying you, if it contains only the items on the list. NRC §91.402

It can

  • Fix your decimal, the effective date and the property it applies to.
  • Set how oil and gas are valued and when settlements are made, and clarify the royalty settlement terms of your lease.
  • Bind the payor and you for the time and to the extent it has been acted on and used for payments. §91.402(g)
  • Define “market value” in your lease as the amount realized at the mouth of the well in an arm's-length sale. §91.402(i)

It cannot

  • Amend your lease or any operating agreement. §91.402(c)(2)
  • Relieve the lessee of its duties under the lease, including to market production as a reasonably prudent lessee. §91.402(h)
  • Override the lease. A division order term that contradicts it is invalid to that extent.
  • Let the payor hold your money because you refused the extras. §91.402(e)

If you refuse a division order that has only the listed provisions, the payor may withhold, without interest, until you sign. Either side can end a division order on 30 days' written notice.

A marked-up sample

A division order, clause by clause

A made-up company and lease. Green letters are clauses on the statute's list. Red crosses are extras that operators add, and that you can strike.

EXAMPLE OPERATING LLC

FICTIONAL COMPANY AND LEASE

On the §91.402(c) listAn extra: you may strike it

  1. DIVISION ORDER

    To: Example Operating LLC (Payor). Effective date October 1, 2026.

    Effective date. Check it against when your interest began.

  2. PROPERTY

    Mesquite Flat Unit A-1, Upton County, Texas. All oil and related liquid hydrocarbons produced.

    Property and product. Match the name and county to your stub and to the lease.

  3. OWNER

    Owner no. 00417. Payee: Jane Q. Sample. Taxpayer ID on file. Address: 12 Elm Street, Austin, Texas.

    Name, address, taxpayer ID. Keep your address current.

  4. DIVISION OF INTEREST

    Royalty interest, decimal 0.00097656. The undersigned certifies it is the legal owner of this interest.

    Rebuild this number from your lease. If it differs from your last stub, ask why.

  5. TERMS OF SALE

    The payor pays all parties at the price agreed by the operator for oil sold under this order, corrected for gravity and temperature.

    Valuation. Where a lease says “market value” for oil sold in the field, the statute defines it as the amount realized at the mouth of the well in an arm's-length sale.

  6. PAYMENT

    Paid monthly. Payments under $100 may accrue up to 12 months. Proceeds under $10 may be held until production ceases.

    Same as §91.402(f). You can ask in writing to be paid annually under $10, and monthly between $25 and $100.

  7. INDEMNITY

    The owner agrees to repay the payor for amounts paid on an interest the owner does not own.

    Allowed unless the parties agreed otherwise. It is only as good as your title.

  8. DISPUTE

    If a claim affects title, the payor may withhold payments, without interest, until it is settled.

    Suspense clause. It lets the payor hold money in a title dispute, without interest.

  9. TERMINATION

    Ends on the first day of the month after 30 days' written notice from either party.

    You can end it, in writing, on 30 days' notice.

  10. NOTICES

    The owner will tell the payor in writing of any change in interest. A change takes effect the first day of the month after notice.

    Send papers when an owner dies or sells. The payor is not bound by a change until it has them.

  11. EXTRA 1

    The payor may deduct the owner's share of gathering, compression and processing costs from royalty, whether or not the lease allows it.

    Not on the list. A division order cannot change your lease. Strike it.

  12. EXTRA 2

    The owner waives interest on late payments.

    Not on the list. Strike it. Refusing extras is not a reason to hold your money.

  13. EXTRA 3

    This order amends the lease as to how royalty is calculated.

    A division order does not amend the lease, and a term that contradicts the lease is invalid.

  14. STATUTORY RIGHTS

    In addition to the rights in this order, an owner may have statutory rights under the laws of this state.

    Required notice. It should be there.

SIGNATURE OF INTEREST OWNER

Jane Q. Sample

Sign after the extras are struck and initialed. Keep a copy.

The clauses paraphrase the model division order the statute prints in section 91.402(d), plus three extras of the kind operators add. The company, lease and owner are made up.

Check the number

Is the decimal right?

The decimal is the one number on the order that moves every check. Rebuild it from your lease before you sign.

CHECK THE DECIMAL

In your lease, like 1/4 or 3/16

What you own in the unit

Acres pooled in the unit

YOUR DECIMAL

0.00097656

1/4 × 5 ÷ 1280

Type it, to compare

Open the full decimal interest calculator

Before you sign

Five steps, in order

  1. Step 1: Read every clause

    Put the seven items from section 91.402(c) beside the order and mark what is not on the list.

  2. Step 2: Rebuild the decimal

    Use your lease, your net acres and the unit size. Ask the payor to explain any difference.

  3. Step 3: Strike the extras and initial them

    Cross out each provision that is not on the list, initial it, and add a line saying you do not agree to it.

  4. Step 4: Sign and send it back, and keep a copy

    Send it by a method that gives you proof of delivery. The payor may not hold your money for the strikes.

  5. Step 5: Check the next statements

    The first stubs after you sign should carry the same decimal. Compare them with the state record.

Related

FAQ

Questions people ask

What is a division order in Texas?

A division order is a document the payor asks you to sign before it pays your royalty. It states the property, the type of production, your name and taxpayer ID, and your decimal or fractional interest, and it sets out how the production is valued and how often you are paid. Texas Natural Resources Code section 91.402(c) lists the only provisions a payor may require in it.

Do I have to sign a division order to get paid?

If the division order contains only the provisions listed in section 91.402(c) and you refuse to sign it, the payor may withhold payment, without interest, until it is signed. If you refuse because it contains provisions beyond that list, the payor may not withhold payment solely because of the refusal (section 91.402(e)).

What can a division order not change?

It does not amend your lease or any operating agreement, and signing one does not relieve the lessee of its obligations under the lease, including any duty to market production as a reasonably prudent lessee. A term in a division order that contradicts a term of the lease is invalid to the extent of the contradiction (section 91.402(c)(2) and (h)).

Can I cross out parts of a division order before I sign?

You can refuse any provision that is not on the section 91.402(c) list, and the payor may not hold your money just because you did. Strike the extra provisions, initial the changes, and send it back with a short note saying which parts you did not agree to. Keep a copy.

How do I check the decimal on a division order?

Multiply the royalty fraction in your lease by the net mineral acres you own in the unit, then divide by the acres in the unit. A one-quarter royalty on 5 net acres in a 1,280-acre unit is 1/4 × 5 ÷ 1,280 = 0.00097656. If the order differs, ask how the payor got its number. Pooling and a different unit size can explain a gap.

What your decimal interest means

Can I cancel a division order later?

Yes. Division orders are binding for the time and to the extent they have been acted on and used for settlements and payments, and either party can end one on 30 days' written notice (section 91.402(g)).

What does “market value” mean in a division order?

Where a lease uses “market value,” “market price” or “prevailing price in the field” for oil or gas sold in the field where it is produced or at a gathering point nearby, the statute defines the term as the amount realized at the mouth of the well by the seller in an arm's-length transaction (section 91.402(i)).

Do division orders apply to gas as well as oil?

The list in section 91.402(c) applies to proceeds from the sale of oil and gas production. The model division order the statute prints in subsection (d) is for oil payments.

Signed already? Check that the stubs use your decimal.

The audit compares your decimal, and every month, with what the Railroad Commission says the lease sold.

Check my statementDecimal calculator

Sources

Primary sources, opened on 29 September 2026. Statute text is the current version on statutes.capitol.texas.gov.