Montana: the Board.

The production tax

• Who pays. The operator pays the tax for all owners. Unless a contract or lease provides otherwise, it deducts each royalty owner's share from settlements 15-36-310. The tax is paid quarterly, within 60 days after quarter end 15-36-311.
• Exempt. Interests owned by the state or local governments 15-36-304(8). Royalties received by tribes under Indian Mineral Leasing Act leases, by the United States as trustee for individual Indians, and by federal, state, county and municipal governments 15-36-309.
• New-well window. The working interest's 18-month reduced rate starts at first production and runs straight through, whether or not production is continuous. It does not restart for a new owner who buys a well after the window has run (Bluebird Energy LLC v. Dep't of Revenue, 2024 MT 10).
• The 0.3% is inside the rate. The statute adjusts every rate to include the Board's privilege and license tax and the natural resource distribution account tax, which together total 0.3% 15-36-304(7). From April 1, 2026 the Board set its privilege and license tax at 60% of the rate authorized by statute ARM 36.22.1242(2); 82-11-131. That only changes how the 0.3% is divided. The total rate you pay stays 14.8%.
• It is not an income tax. Tax-exempt owners still bear it.

Income tax withholding

• Rate. The payor (the "remitter") withholds the highest marginal individual rate from each royalty payment: 5.65% for 2026, 5.4% from January 1, 2027 15-30-2538, amended 2025; 15-30-2103. The base is the net Montana royalty in Box 2 of Form 1099-MISC.
• Ignore the old 6%. Before 2025 the statute fixed the rate at 6%. The 2025 amendment tied it to the top income tax rate instead. The Department of Revenue's own withholding web page and many secondary sources still say 6% as of November 2026, and so does the text of the Department's rules (ARM 42.17.601 and 42.17.603, last amended 2024). The statute controls.
• What it covers. Royalty, overriding royalty, production payments, and any other nonworking interest, including advance royalty payments tied to production. An owner who takes production in kind must send the withholding to the Department itself. ARM 42.17.601
• Who is withheld on. Every royalty owner, resident or not, unless excluded below. The statute applies to "each royalty payment made to a royalty owner," and neither it nor the Department's withholding page limits it to nonresidents. What matters is that the property is in Montana. 15-30-2537, -2538
• Who is excluded 15-30-2539: governments; tribes, for on-reservation Indian Mineral Leasing Act production; the United States as trustee for individual Indians; publicly traded partnerships; organizations exempt under 15-31-102; a royalty owner that is the remitter itself; and small producers averaging under 100,000 barrels of oil and 500 MMcf of gas a year over three prior calendar years. The Department tells each oil and gas producer by September 15 whether it must withhold the next year. The small-producer exception does not cover a payor that is not itself a producer, and if a producer's oil or its gas crosses the line, both are withheld on. ARM 42.17.601(2), 42.17.603(1), (3), (5)
• Small payments. The Department lets payors skip withholding on royalty owners paid less than $2,000 a year or less than $166 a month 15-30-2539(3); ARM 42.17.603(12).

What the operator must show

A pooling order requires 82-11-202(1)(b):

• a permanent spacing unit;
• an applicant that owns an interest or has drilled or proposes a well;
• an unsuccessful, good-faith attempt to pool voluntarily;
• a hearing.

The 30-day election

An owner is presumed to refuse if it neither pays nor agrees in writing within 30 days of a notice delivered by written acknowledgment or certified mail. The notice must state the well location, depth, target formations, estimated costs, and spud date. 82-11-202(3), amended 2023

Interest, and how not to waive it

• Rate. The greater of 15% or prime plus 6 points, from the due date.
• When it does not apply. To owners taking production in kind, or while a genuine title or entitlement dispute affects distribution 82-10-103(4). Fast curative work protects the interest claim.
• Catch-up payments. Accepting sporadic catch-up payments did not waive interest (Textana v. Klabzuba, 2009 MT 401). But Montana law still treats accepting "the whole principal, as such" as a waiver 27-1-214, so reserve interest in writing when suspended funds are released.

Demand and suit

• Written demand for an accounting; if it is not met in 60 days, suit in the county where the land lies 82-10-101.
• Payment suits go in the county where the well is located 82-10-103(3).
• The prevailing party recovers attorney fees either way, so a weak claim can cost you.
• Limitations 27-2-202: 6 years on a written contract, 5 years unwritten, 3 years for other obligations not founded on a writing. Which period applies depends on how the claim is characterized.

The check stub

Montana requires eleven items on every stub, including the production period, lease identifier, product, volumes, taxes withheld by amount and type, net values, and contact information. Every charge must be listed by line item. A knowing violation is a misdemeanor. This is your tool for testing deductions. 82-10-104

Deductions

No Montana Supreme Court decision settles post-production costs on private (fee) leases, so lease language controls. State trust land leases reserve royalty free of costs and deductions.

Division orders

A Montana division order 82-10-110 must warrant the division of interest, list each payee's name, address and tax ID, and require notice of ownership changes. It cannot alter the lease or relieve the lessee of lease duties. Signing to get paid does not give up lease rights.

Recording: race-notice

An unrecorded deed is void against a later good-faith buyer for value who records first 70-21-304. Record promptly in the Montana county: instruments recorded only in another state are not notice there.

Reservations are read for the grantor

In Wicklund v. Sundheim, 2016 MT 62, 383 Mont. 1, 367 P.3d 403 (Richland County):

• an ambiguous 1953 royalty reservation was construed in favor of the grantor under 70-1-516, the reverse of the Texas rule;
• an expert's opinion on what the deed language meant was inadmissible;
• old division orders, a communitization agreement, and years of royalty paid without objection were strong evidence of intent;
• laches (losing a claim by unreasonable delay) failed, because the owners asserted the interest whenever development occurred.

Keep old division orders and payment records. They are evidence of what a reservation means.

Other title points

• Eastern Montana counties sold tax-deed land reserving a 6¼% royalty, and some state "mortgage lands" carry a 6¼% state royalty.
• Homestead-era federal mineral reservations are common.
• On the Fort Peck Reservation (Valley, Roosevelt, Daniels and Sheridan counties), Indian trust minerals sit in a checkerboard with private land, and federal approvals can slow unit-wide payment.

No dormant mineral act

Montana considered and rejected dormant or abandoned mineral bills in 1977, 1979, 1981, 1983, 1985, 1987, 1989, 1993, 2005, and 2007. No such provision is in the 2025 Code. Severed minerals do not lapse for non-use.

Keeping a lease alive (Somont)

A Montana oil and gas lease ends automatically when paying production stops. The lessee must pass a two-step test, well by well (Somont, 2002 MT 141 and 2006 MT 90):

• Step 1, paying quantities. Economics count here.
• Step 2, temporary cessation. The stoppage must come from a sudden stoppage or mechanical breakdown "or the like," with immediate, diligent repair. Low prices, the economy, and the operator's finances do not count.

Bakken leases are mostly held by unit production under pooling orders, so this bites hardest on older vertical-well leases and price-driven shut-ins.

Releasing an expired lease

• The lessee must record a release within 60 days of expiration. It is a misdemeanor if not cured within 30 days of the owner's written notice 82-1-201.
• Lawsuit route: written demand at least 20 days before suit. The owner recovers $100, costs, attorney fees, and proven damages; the lessee gets fees if forfeiture is not proved. A lessee that releases after suit is filed still counts toward the owner prevailing (Somont II, 2006 MT 90) 82-1-203.
• No-lawsuit route: if the lease expired by its terms more than 3 years ago, the owner serves a notice. Unless the lessee records an affidavit that the lease is still in effect within 60 days, the owner records proof of service and the lease is terminated of record 82-1-202.

Pore space

If deeds do not say who owns underground storage space, the surface owner is presumed to own it 82-11-180(3). The rule does not apply on an Indian reservation without tribal action. Mineral-only owners should not assume they own pore space.

Surface damages

• The operator must give written notice 20 to 180 days before surface disturbance, to the surface owner's county record address 82-10-503.
• Damages cover lost agricultural production and income, lost land value, and lost improvement value 82-10-504.
• The parties must negotiate in good faith. The owner may elect annual payments (exploration damage is a lump sum). An annual payment unpaid 60 days after notice is owed double.
• Defective notice does not stop the mineral owner's right of entry (Pinnacle Gas, 2009 MT 12). Surface use agreements are where real terms are won.

Your legal description

DataMiner and the Board's orders are organized by township and range. Get the section, township and range off your deed or an old check stub before you start.

The API number

Every Montana well number begins 25. The Bakken counties are Richland 083, Roosevelt 085 and Sheridan 091. Take one apart if you have not seen the structure before.