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A Further Look at Division Orders and Problems in Accounting and Payment of Proceeds From Oil and Gas

Robert E. Rain, Jr., Proceedings of 8th Annual Rocky Mountain Mineral Law Institute (1963)

This paper will contain two main divisions. The first will relate to division orders and the second to some recent developments in the problems of apportionment of royalties, particularly with respect to the so-called entirety clause.

It will not go into the differences in division orders covering the sale of oil and those covering the sale of gas. An excellent discussion of these distinctions is found in Mr. A. W. Bound's paper presented to the Southwestern Legal Foundation's Fifth Annual Institute on Oil and Gas Law and Taxation.1 More space will be given to the question of oil division orders because they seem to have been the subject of more litigation than have gas division orders. This is probably due to the basic difference in the royalty clause in the usual oil and gas lease which provides that royalty oil may be taken in kind while royalty on gas is usually a fractional portion of the proceeds of sale. More emphasis will be placed on division orders executed by lessors than by lessees, because more problems have been created by the former.

No effort will be made to discuss the problems relating to the common carrier and common purchaser acts. This [70] is a field of law which in all likelihood will be receiving more attention in the future and it is the subject of a Comment in a recent volume of the Texas Law Review.2

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