77-3-444. Limitation on overriding royalties and payments out of production. - Montana Statutes

     77-3-444. Limitation on overriding royalties and payments out of production. (1) A person, partnership, or association may not enter into an agreement that in the aggregate creates overriding royalties or payments out of the production of oil and gas in excess of 5% above the landowner's royalty payable to the state of Montana unless that agreement expressly provides that the obligation to pay overriding royalties or payments out of production may be suspended by the director of the department at any time upon a determination that the excess overriding royalties or payments out of production constitute a burden on lease operations to the extent that:
     (a) proper and timely development may be retarded;
     (b) continued operation of the lease may be impaired; or
     (c) premature abandonment of the wells may occur.
     (2) This section applies separately to any zone or portion of a lease segregated for computing a royalty due to the state of Montana.
     (3) All agreements of any kind creating overriding royalties or payments out of production of oil and gas must be filed with the department within 30 days of their creation by the lessee.

     History: En. Sec. 1, Ch. 157, L. 1985; amd. Sec. 287, Ch. 42, L. 1997.