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Division orders are created after a well has been drilled and production has begun. The operating company prepares the division order by confirming the title and determining each owner's decimal interest (net revenue interest) in the well.
A lease establishes the rights and terms for mineral extraction, while a division order details the distribution of revenue from the produced minerals.
Changes in ownership affect division orders by requiring updates to reflect the new ownership structure. When an owner transfers all or part of their interest, the operating company issues an amended division order or transfer order.
Essentially, division orders formalize the distribution of royalty payments based on the agreed-upon ownership interests.
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