Oil and Gas Terminology

    Interest Decimal

  • The percentage of production one receives
  • Working Interest Owner

  • WI owners are obligated to pay a percentage of cost of leasing, drilling, producing and operating a well or unit. After royalties are paid, the WI also entitles its owner to its share in production revenues with other WI owners, based on the percentage of WI owned.
  • Royalty Interest Owner

  • RI owners have ownership of a percentage of production or production revenues, produced from leased acreage. The owner of this share of production does not bear any cost of exploration, drilling, producing or operating a well or unit.
  • Division Order

  • A Division Order is an instrument which states the proportional ownership in a producing well. It is generally received within 3 to 4 months after well completion. The revenue distributor and the recipient of the oil and gas revenue agree to the exact decimal interest by signing a Division Order.
  • Title Opinion

  • An oil company has done work prior to sending Division Orders by analyzing supporting documents and mineral title associated with a producing property to verify the correct owner and the corresponding correct interest.
  • Oil and Gas Lease

  • A legal document executed between a landowner (or mineral rights owner) who is the lessor and a company or individual who is the lessee that grants the right to exploit the premises for minerals.
  • IRS form W-9

  • An IRS form used by third parties to file an information return with the IRS on reportable payments made to others. It requests the name, address, and taxpayer identification information (usually in the form of a Social Security number for an individual) or an Employer Identification number. The form is never sent to the IRS, but is maintained by the person who files the information return for verification purposes. The information on the W-9 is usually reported on a Form 1099.
  • IRS form 1099-MISC

  • An IRS form used to report income paid by BBX Operating to royalty owners. 1099’s are sent out by January 31st every year. Payees use the information provided on the 1099 forms to help them complete their own tax returns.