Undivided interest

An undivided interest arises when the owners of a working interest share revenues and expenses in accordance with their proportional ownership interests. For example, in a joint interest operation, there is an agreement between two or more working interest owners, where one owner is designated as the operator of the property, and each owner retains an undivided interest in the property. The operator is responsible for overall management of the lease.

An alternative arrangement is a divided interest arrangement, where the owners of a working interest receive revenue and pay for expenses based on their ownership of specific acreage.

Related Courses

Oil and Gas Accounting