Texas division orders
The division order: sign what the law allows.
Read every clause. Most are fine. Some are not.
A DIVISION ORDER MAY CONTAIN ONLY:
§91.402(c)- The effective date
- A description of the property and the type of production
- 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
- Permission to suspend payment during a title dispute
- Your name, address and taxpayer ID
- How production is valued and when settlements are made
- A notice that you may have other statutory rights
Anything else: you may refuse it.
Watch this guide · 5 minutes · captions on
Transcript of “Division orders in Texas”
Introduction
Before an operator pays your royalty, it may send you a division order to sign. Texas law lists exactly what that paper may contain, and what you can strike. A division order is an agreement, signed by you, that tells the payor how to distribute the proceeds from the sale of oil and gas.
What a division order is
It says who is paid. What share you own. And how the production is valued, and when you are settled with. A payor may require you to sign one before it pays. But the list of what it may contain is short. The law says a payor may require a signed division order containing only these seven things.
Seven things it may contain
A: the effective date. B: a description of the property and the type of production. C: your decimal or fractional interest, the type of interest, and your certification of title. Unless you agree otherwise, it may also ask for a month's notice of any change, and for you to repay the payor if you turn out not to own the interest. D: permission to suspend payment until a title dispute is resolved. E: your name, address and taxpayer ID. F: how production is valued, and when settlements are made. And G: a notice that you may have other statutory rights.
Extras you may refuse
Operators often add extras. Here are three. One lets the payor take gathering, compression and processing costs, whether or not your lease allows it. A term that contradicts your lease is invalid to that extent. Another waives interest on late payments. That is not on the list, so you may refuse it. A third says the order amends the lease. By law, a division order does not amend any lease.
What happens if you refuse
What if you refuse? That depends on what you refuse. If the order has provisions beyond the list, and you will not sign because of them, the payor may not withhold payment solely because of your refusal. But if the order has only the listed provisions and you refuse to sign, the payor may withhold payment, without interest, until you do.
It cannot change your lease
Whatever a division order says, it is not your lease. The statute is plain: such a division order does not amend any lease or operating agreement between the owner and the operator. And signing one does not relieve the lessee of its duties under the lease, including the duty to market your production as a reasonably prudent lessee. The decimal is the one number on the order that moves every check. Rebuild it from your lease before you sign.
Rebuild the decimal first
Your royalty fraction, times your net mineral acres, divided by the acres in the unit. One quarter, times five, divided by twelve-eighty, is 0.00097656. If the order differs, ask how the payor got its number. Pooling and a different unit size can explain a gap.
Signed already?
You can also change your mind later. Either you or the payor can end a division order on thirty days' written notice. And it binds only for the time, and to the extent, that it has been acted on and used for settlements and payments.
Five steps before you sign
So, before you sign, five steps. One: read every clause against the list. Two: rebuild the decimal from your lease. Three: strike the extras and initial each one, with a line saying you do not agree. Four: send it back by a method that gives you proof of delivery, and keep a copy. Five: check that the next statements carry the same decimal, and compare them with the state record.
Ask how they got the number
If the decimal differs from yours, ask before you sign. Please tell me how you calculated the decimal interest in this division order, and send the net mineral acres and the unit acres you used. Keep the answer with your copy of the order.
What to do next
Rebuild your decimal in a minute with our free decimal interest calculator. The sources for this video are on screen.
0.00035400
the median decimal on a Texas royalty account
5,054,232 accounts on 142 county rolls, tax years 2024 to 2026.
What a decimal means →23,967
Texas leases changed operator in one year
The 12 months to August 2026, from the state's production reports.
Who took over which leases →What the law says
What section 91.402 lets a division order do
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
EXAMPLE OPERATING LLC
FICTIONAL COMPANY AND LEASE
DIVISION ORDER
To: Example Operating LLC (Payor). Effective date October 1, 2026.
Effective date. Check it against when your interest began.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Check the number
Is the decimal right?
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
Your lease, from the state’s record
Run the math on your lease
Pick your lease and type your decimal. We use the barrels and gas the state says the lease sold and that month's average price.
Your lease
Type the lease name as your stub prints it, or the state's number.
This is what operators report to the Railroad Commission of Texas for the whole lease. It is not a record of what you were paid, and it is not legal or tax advice.
Before you sign
Five steps, in order
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.
Step 2: Rebuild the decimal
Use your lease, your net acres and the unit size. Ask the payor to explain any difference.
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.
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.
Step 5: Check the next statements
The first stubs after you sign should carry the same decimal. Compare them with the state record.
Related
Related
- ToolDecimal interest calculatorRoyalty fraction times net acres over unit acres.
- ToolUnit decimal checkerYour decimal against the unit acres on the state's permit.
- GuideWhat your decimal interest meansWhere the long decimal comes from and how to rebuild it.
- HelpInherited mineral rightsWhat to do, in order, after a family member's death.
- HelpTexas royalty auditThe ten checks, on your stub, against the state record.
- GuideTexas royalty owner rightsSections 91.401 to 91.507 in plain English.
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.
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.
Why did I get a new division order when nothing changed?
A new operator, a new purchaser, a new well, a unit change or a revised title opinion can each bring a new order. Check whether the decimal moved and ask why if it did.
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.
Sources
Primary sources, opened on 29 September 2026. Statute text is the current version on statutes.capitol.texas.gov.