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
What is the primary purpose of a division order in oil and gas operations?
Answer: To authorize the purchaser to distribute revenues according to each owner's decimal interest
A division order authorizes the oil and gas purchaser to pay each interest owner their proportionate share of production revenues based on their certified decimal interest.
What does the 'decimal interest' stated on a division order represent?
Answer: An owner's fractional share of gross production revenues from a specific well or lease
The decimal interest on a division order represents each owner's fractional share of gross production revenues, calculated from their lease interest and applicable royalty provisions.
Who is typically responsible for preparing division orders for a new well?
Answer: The operator or the first purchaser of production
Division orders are typically prepared by the operator or the first purchaser of production, based on the division order title opinion and ownership research.
What happens to revenue payments if an interest owner refuses to sign a division order?
Answer: Payments are suspended and placed in a revenue suspense account until the issue is resolved
When an owner refuses to execute a division order, the purchaser typically suspends that owner's revenue share in a pay suspense account pending resolution.
What is 'pay suspense' in the context of division order administration?
Answer: Revenue held in reserve pending resolution of title issues or unsigned division orders
Pay suspense refers to revenues withheld by the purchaser and held in reserve until title issues are cleared or division orders are executed by all interest owners.
A division order title opinion differs from a drilling title opinion primarily in that it:
Answer: Examines ownership down to current parties for the purpose of revenue distribution
A division order title opinion examines the chain of title to allocate production revenues to current owners, whereas a drilling title opinion confirms the right to drill before operations begin.