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CPL Division Orders & Revenue Distribution Flashcards

6 cards from real CPL practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 CPL Division Orders & Revenue Distribution flashcards as text

  1. How is the Net Revenue Interest (NRI) for a working interest owner calculated?

    Answer: NRI = Working Interest × (1 − Total Royalty Burden)

    A working interest owner's NRI equals their working interest multiplied by one minus the total royalty burden, reflecting what they net after all royalty obligations are paid.

  2. What is an overriding royalty interest (ORRI) and how does it differ from a landowner's royalty?

    Answer: An ORRI is carved from the working interest and expires when the lease terminates; a landowner's royalty is reserved in the lease and runs with the land

    An ORRI is an interest carved out of the working interest that bears no costs and expires with the lease, whereas a landowner's royalty is reserved in the mineral lease and runs with the land.

  3. When a working interest is assigned, the assignee typically receives:

    Answer: A proportionate share of both revenues (NRI) and costs (WI) as defined in the assignment

    An assignment of working interest conveys the assignee's proportionate share of both revenues (expressed as NRI) and costs (expressed as WI percentage) per the assignment terms.

  4. What is 'revenue suspense' as used in division order administration?

    Answer: Funds withheld by the purchaser due to unresolved title, missing payees, or unsigned division orders

    Revenue suspense refers to funds the purchaser withholds and holds in reserve because ownership is unclear, title is disputed, or an owner has not signed a division order.

  5. What is a 'title requirement' in the context of division order preparation?

    Answer: A condition identified in the title opinion that must be satisfied before an owner can be paid

    A title requirement is a curative condition specified in the division order title opinion that an owner must satisfy—such as recording a deed or probating an estate—before their interest can be paid.

  6. What does a 'run statement' provided to royalty owners typically show?

    Answer: The volume of production sold, price received, deductions taken, and net payment for the period

    A run statement details the actual volumes produced and sold, the price received, any allowable deductions, and the resulting net payment to the royalty owner for the period.