Posted on: Aug , 2019

Oil derrick with puzzle pieces scattered over it. The puzzle is a US dollar.Division order analysts are a critical component of the energy industry, helping the wheels of the oil and gas business run smoothly.  In her book, “Royalty Owner Nightmares,” Marsha Brazeale put it succinctly: “…division order analysts are the people charged with making certain that royalty owners are paid.”

In my experience, division order analysts tend to be detail-oriented, good with numbers, and great communicators, but there is one skill, or trait, that most division order analysts have that is not so obvious yet makes them especially well-suited to the job.

So, what’s the division order analyst super power?

I’ll get to that in a moment, but first…

What’s a Division Order?

The term “Division Orders” dates back to the early days of oil and gas development when pioneers in the business needed to find a way to let the purchaser of the oil know how to distribute the money (revenue) from the sale of production in the well.  Since a single well could have more than one owner, the purchaser needed to know the names of all the owners, their interest type and what their share of the revenue should be.

So, the operator came up with an ownership list and physically posted it on the storage tank for the purchaser to find.  It was an “order” to the purchaser directing how the multiple owners’ interests in the well would be divvied out.  Hence the name, “Division Order.”

Today the term has two different meanings:

  1. A division of interest (a.k.a. paysheet or “deck”) for a producing well listing all the owners in the specific well, their interest type and percentage of interest (usually expressed in decimal form.)
  2. Form mailed to each owner in the well listing their individual interest type and percentage.  The form does not list the interest of any of the other owners in the well.

Changes of Ownership

In addition to setting up the well, division order analysts ensure that the company’s ownership records remain current. For example, if an owner dies, their interest is “suspended” (not paid) until the new owners can be identified and their interests legally proven.  In division order parlance, this is referred to as “changes of ownership” or “maintenance.”

Often division order analysts have to research the owners who are “in suspense”; that is, their ownership can’t be verified, they can’t be located, and the money is in danger of being turned over to the state. This is usually called an escheat list.

Escheat – A Division Order Cautionary Tale

When I was at Exxon, we would stop everything we were doing once a quarter to try to find missing owners before we were required to turn their unpaid royalties over to the state.  We referred to this as simply, “Escheat.”

Every state has what are called “Escheat Laws.”  These laws require activity on an account or, if no activity after a period of years, any monies held by the institution be turned over to the state treasury.

So all the division order analysts at Exxon would receive a list of all the owners with unpaid monies and the amount of monies that were “in suspense” until we could identify the owner.

“Division order analysts are the people charged with making certain that royalty owners are paid.”

– Marsha Brazeale, “Oil & Gas Royalty Nightmares”

When Escheats Go Bad

During one of our quarterly sessions we began to get claim deeds from different owners with huge amounts of unpaid money in suspense – $10,000, $30,000, $100,000.  We wondered why anyone would sell their interest when they had so much money that they were entitled to.  Wouldn’t you recoup the monies first and then sell it?

It didn’t make any sense.

The deeds were also suspicious looking.  For one thing, they were all on the same form (Quit-claim Deed) and were all sold to the same company.

It turned out to be a scam—find people with same name as current owners, get them to sign a document saying they DON’T own property in Texas (or whichever state), then claim that property.

The company was committing fraud, but how did they know which owners to target with such large amounts of unpaid royalty?

While it was never proven, we believed that one of our division order analysts took the escheat list with all the owners names and dollars in unpaid royalty and sold it to this disreputable company.

King and queen on their thrones

In Merrie Olde England, all property belonged to the king. If you wanted to mine the royal gold or silver mines, you had to pay a fee to the king. This fee was known as a royalty payment and we still use the term to this day.

We stopped releasing the funds and retracted any amounts we had paid.

In “Oil & Gas Royalty Nightmares,” Marsha Breazeale recounts a similar story but hers ended with the FBI showing up at their office and arresting the suspected analyst for being an accessory to mail fraud, a federal offense.  The analyst got 3 years in federal prison for their participation in the scam.

Clearly, division order analysts not only have to be ethical themselves, they also have to be on guard against scams and schemes!

Energy Company Ambassadors

In many ways, the division order analysts are also the oil and gas companies’ ambassadors to the mineral owners, along with landmen.

Division order analysts are the ones who are contacted when there is a transfer of interest and they often have to explain legal-related concepts to the owners.

This is great on-the-ground public relations for the company!

So, What is the Division Order Analyst Super Power?

You might think it would be their ability to communicate clearly. After all, the division order analyst is the communication hub keeping the oil and gas revenue and production moving.

But I’ve found that the people who are really good at the job, and really enjoy it, are not only excellent communicators but also have the ability to solve puzzles!  That’s where the analyst part of the job comes in!

Now it’s Your Turn!

I’d love to hear what YOU think the DO analysts’ super power is. Drop me a line and let me know what you think. If enough people weigh in, I’ll include your responses in the next newsletter.