Division of Interest Calculations

In today’s post, we’ll be discussing how your interest in an oil and gas well is calculated on a Division Order. Read on to learn more about this calculation!

In Oklahoma, the Operator of a well, which is typically an oil and gas company, is responsible for paying all royalty owners their proceeds from the production of oil and gas from the well. Division Orders are used by these oil and gas companies to make payments of the proceeds from the producing well to the royalty owners.

Oklahoma law requires that certain information be reflected on every Division Order, including your name, address, and social security or tax identification number. Also included will be the interest that you own in the well, which is reflected as a division of interest (a “DOI”). This division of interest is calculated using the following formula:

For example, if you owned 80 net mineral acres in a well that is spaced as a 640-acre unit, and your lease was executed at a 1/8 royalty (i.e. 0.125 royalty), your division of interest was reflected on the Division Order would be equal to 0.015625. This interest is calculated as follows:

If the well is a multiunit well, then the allocation factor will also be taken into account in this calculation. Using the same example above but assuming it is a multiunit well and the unit your mineral interest is located on has an allocation factor of 47%, your division of interest would equal 0.00734375 and would be calculated as follows: