reglab/statecodes huggingface dataset:
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 3. Coal › 77-3-316. Rental and royalty terms

77-3-316. Rental and royalty terms.
(1) The compensation of the state under all coal mining leases must be upon a rental and royalty basis and must be fixed and determined by the board.
(2) The rental and royalty terms of each lease must be subject to readjustment to reflect fair market value at the end of its primary term of 10 years and at the end of each 5-year period thereafter if the lease is producing coal in commercial quantities.
(3) The rental may be on a per-acre basis or per-ton basis but the rental may not be less than $2 per acre.
(4) (a) The amount of the royalty must be based upon:
(i) the kind, grade, and character of the coal in each particular mine;
(ii) the size, shape, and nature of the coal vein, strata, or body; and
(iii) the shipping and marketing facilities for the product.
(b) Consideration must also be given to every other known factor affecting the value of each particular coal mining lease, but the royalty for the coal mined may not be less than 10% of the f.o.b. mine price of a ton prepared for shipment.
History: (1), (3), (4)En. Sec. 40, Ch. 60, L. 1927; re-en. Sec. 1805.40, R.C.M. 1935; amd. Sec. 3, Ch. 358, L. 1975; Sec. 81-503, R.C.M. 1947; (2)En. Sec. 39, Ch. 60, L. 1927; re-en. Sec. 1805.39, R.C.M. 1935; amd. Sec. 5, Ch. 257, L. 1965; amd. Sec. 1, Ch. 121, L. 1967; amd. Sec. 6, Ch. 22, L. 1971; amd. Sec. 1, Ch. 291, L. 1971; amd. Sec. 31, Ch. 428, L. 1973; amd. Sec. 2, Ch. 358, L. 1975; Sec. 81-502, R.C.M. 1947; R.C.M. 1947, 81-502(part), 81-503; amd. Sec. 5, Ch. 332, L. 2011.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 3. Coal › 77-3-317. Report and payment of royalty

77-3-317. Report and payment of royalty.
(1) On or before the last day of each month every holder of a producing coal mining lease shall make a report to the department on a form the department prescribes showing:
(a) the number of tons mined during the preceding calendar month;
(b) the price obtained for the number of tons mined during the preceding calendar month at the mine;
(c) the total amount of all sales; and
(d) any additional information required by the department.
(2) The report must be verified by the lessee and be accompanied by payment of the royalty due the state for the preceding month as shown by the report.
History: En. Sec. 45, Ch. 60, L. 1927; re-en. Sec. 1805.45, R.C.M. 1935; amd. Sec. 33, Ch. 428, L. 1973; R.C.M. 1947, 81-508; amd. Sec. 9, Ch. 96, L. 2013.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 3. Coal › 77-3-318. Disposition of royalties and other receipts

77-3-318. Disposition of royalties and other receipts.
All fees, rentals, royalties, and bonuses collected under state coal leases shall be paid to the department and credited as follows:
(1) All fees shall be credited to the state general fund.
(2) All rentals and bonuses shall be credited to the income fund of the grant to which the lands under each lease belong.
(3) All moneys collected as royalties shall be credited to the permanent fund arising from the grants to which the lands under lease belong.
History: En. Sec. 47, Ch. 60, L. 1927; re-en. Sec. 1805.47, R.C.M. 1935; amd. Sec. 34, Ch. 428, L. 1973; amd. Sec. 5, Ch. 358, L. 1975; R.C.M. 1947, 81-510.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 3. Coal › 77-3-321. Repealed

77-3-321. Repealed.
Sec. 8, Ch. 18, L. 1999.
History: En. Sec. 46, Ch. 60, L. 1927; re-en. Sec. 1805.46, R.C.M. 1935; R.C.M. 1947, 81-509.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 3. Coal › 77-3-322. Obligation to pay royalties under coal lease contract -- interest

77-3-322. Obligation to pay royalties under coal lease contract -- interest.
(1) The obligation arising under a coal lease to pay coal royalties to the department, to deliver coal to a purchaser to the credit of the department, or to pay a portion of the proceeds of the sale of the coal to the department is of the essence in the lease contract.
(2) If the operator under a coal lease fails to pay coal royalties to the department within 120 days after the initial coal produced under the lease is marketed and within 90 days for all coal produced and marketed thereafter, the unpaid royalties must bear interest at the legal rate of interest authorized under 31-1-106 from the date due until paid. The operator may remit semiannually to the department the aggregate of 6 months' royalties if the aggregate amount is less than $50 and annually if the aggregate amount is less than $10.
(3) An action for failure to make payments under the lease or seeking payments under this section must be filed in the district court for the county in which the coal mine is located, and that court has jurisdiction over any actions brought under this section. The prevailing party in a proceeding brought under this section is entitled to recover court costs and reasonable attorney fees.
(4) This section does not apply if the department has elected to take the owner's or assignee's proportionate share of production in kind or if there is a dispute as to the title to the minerals or entitlement to royalties, the outcome of which would affect distribution of royalty payments.
History: En. Sec. 1, Ch. 243, L. 2011.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 3. Coal › 77-3-323. Audit -- notice -- action to compel payment

77-3-323. Audit -- notice -- action to compel payment.
(1) Except as provided in subsection (2), the department may, within 5 years of the filing of a report pursuant to 77-3-317, commence an audit of a lessee's or former lessee's operation to determine whether the report is complete and accurate and whether all royalties owed have been paid. The department shall notify the lessee in writing of the audit. The notice must describe the period for which the audit is being conducted. Upon conclusion of the audit, the department shall notify the lessee of the department's conclusions and, if the department has determined that additional royalties are owed, the basis for that determination. An action to compel payment of royalties due must be commenced within 2 years of the date of mailing the notice.
(2) If a lessee or former lessee, with intent to evade payment of royalties, purposely or knowingly files a false report or purposely or knowingly fails to pay royalties owed, the department may conduct an audit and file an action to collect royalties at any time after the royalties are due.
History: En. Sec. 2, Ch. 243, L. 2011.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-401. Oil and gas leases authorized

77-3-401. Oil and gas leases authorized.
(1) The board is hereby authorized and empowered to lease in such manner as it may determine, not inconsistent with The Enabling Act and the constitution, any state lands to which the title has vested in the state and in which the oil and gas rights are not reserved by the United States, for prospecting and exploring for oil and gas, mining, drilling, developing, and removing the same upon the terms and conditions herein prescribed to any person, association, corporation, domestic or foreign, or municipality qualified under the constitution and the laws of the state.
(2) This power and authority to lease state lands for such purposes shall extend to and include all lands owned by the state under navigable lakes and streams and shall also extend to and include all those state lands which have been sold but in which the oil and gas rights have been reserved by the state; but in such cases and in all cases where the lands are under lease for grazing, agriculture, or similar purposes, care shall be taken in issuing the oil and gas leases to protect the rights of the purchaser or lessee.
History: En. Sec. 1, Ch. 108, L. 1927; re-en. Sec. 1882.1, R.C.M. 1935; amd. Sec. 1, Ch. 90, L. 1943; amd. Sec. 1, Ch. 261, L. 1947; amd. Sec. 6, Ch. 184, L. 1961; R.C.M. 1947, 81-1701(part).
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-402. Rules

77-3-402. Rules.
(1) The board shall have the power and authority to prescribe such rules and to do and perform all acts and things not inconsistent with The Enabling Act, the constitution, and the statutes of this state as it may deem necessary and proper relating to the leasing of state lands for oil and gas exploration and development. The board shall formulate rules not inconsistent with law governing the leasing of state lands for oil and gas exploration and development which shall be compiled and printed periodically.
(2) Copies of the rules and notices of changes therein shall be made available to any person desiring a copy thereof at a reasonable cost to be fixed by a rule of the board.
History: En. Sec. 7, Ch. 108, L. 1927; re-en. Sec. 1882.7, R.C.M. 1935; amd. Sec. 1, Ch. 144, L. 1961; R.C.M. 1947, 81-1707.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-403. Hearings on questions related to leases

77-3-403. Hearings on questions related to leases.
The board is hereby granted full power and authority to order and hold hearings on any matter or question involving oil and gas leases under such rules as it may adopt.
History: En. Sec. 10, Ch. 108, L. 1927; re-en. Sec. 1882.10, R.C.M. 1935; R.C.M. 1947, 81-1710(part).
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-404. Limitation on area under single lease

77-3-404. Limitation on area under single lease.
An oil or gas lease issued on state lands may not embrace more than 640 acres, except that any section surveyed by the United States which contains more than 640 acres may be included under one lease.
History: En. Sec. 2, Ch. 108, L. 1927; amd. Sec. 1, Ch. 193, L. 1931; amd. Sec. 1, Ch. 171, L. 1933; re-en. Sec. 1882.2, R.C.M. 1935; amd. Sec. 1, Ch. 109, L. 1941; amd. Sec. 1, Ch. 91, L. 1943; amd. Sec. 1, Ch. 128, L. 1945; amd. Sec. 1, Ch. 122, L. 1953; amd. Sec. 84, Ch. 428, L. 1973; R.C.M. 1947, 81-1702(part).
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-405. Leased lands to be generally compact and contiguous

77-3-405. Leased lands to be generally compact and contiguous.
(1) The lands shall be leased in as compact bodies as the form and areas of the tracts held by the state and offered for lease will permit.
(2) No lease may embrace noncontiguous subdivisions of lands unless the subdivisions are within an area comprising not more than 1 square mile.
History: En. Sec. 1, Ch. 161, L. 1955; amd. Sec. 12, Ch. 22, L. 1971; amd. Sec. 85, Ch. 428, L. 1973; amd. Sec. 1, Ch. 136, L. 1974; amd. Sec. 1, Ch. 379, L. 1975; R.C.M. 1947, 81-1702.1(3).
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-406. Number of leases which one person may hold

77-3-406. Number of leases which one person may hold.
Any person, association, corporation, or municipality qualified to hold an oil or gas lease on state lands may receive from the board or take through assignment or succession, will, judgment, decree, or otherwise through the operation of law more than one oil and gas lease to state lands, subject to such regulations and limitations as the board prescribes.
History: En. Sec. 2, Ch. 108, L. 1927; amd. Sec. 1, Ch. 193, L. 1931; amd. Sec. 1, Ch. 171, L. 1933; re-en. Sec. 1882.2, R.C.M. 1935; amd. Sec. 1, Ch. 109, L. 1941; amd. Sec. 1, Ch. 91, L. 1943; amd. Sec. 1, Ch. 128, L. 1945; amd. Sec. 1, Ch. 122, L. 1953; amd. Sec. 84, Ch. 428, L. 1973; R.C.M. 1947, 81-1702(part).
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-407. New leases on lands leased prior to February 28, 1953

77-3-407. New leases on lands leased prior to February 28, 1953.
(1) In the case of all leases issued under the provisions in force prior to February 28, 1953, where oil or gas is being produced, the board shall at the expiration thereof or termination for any cause advertise the land held thereunder for re-leasing and lease the same to the highest responsible bidder therefor at public auction on the terms then existing for such leasing. Any person, association, firm, or corporation who held such lease at the expiration thereof shall have the privilege of re-leasing the same at such highest responsible bid offered therefor upon such terms and conditions as may be prescribed by the board or the legislature.
(2) In the case of all leases issued under the provisions in force prior to February 28, 1953, where oil or gas is not being produced, the board may at the expiration thereof or termination for any cause advertise the land held thereunder for re-leasing and lease the same to the highest responsible bidder therefor at public auction if in the judgment of the board such advertising and public auction will result in leasing of the land on terms advantageous to the state.
History: En. Sec. 15, Ch. 108, L. 1927; amd. Sec. 3, Ch. 171, L. 1933; re-en. Sec. 1882.15, R.C.M. 1935; amd. Sec. 1, Ch. 104, L. 1965; R.C.M. 1947, 81-1715.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-408. Certain state officers not to be interested in leases

77-3-408. Certain state officers not to be interested in leases.
It is unlawful for any officer or employee of any agency of the executive branch of state government who is required to inspect or examine oil or gas wells or otherwise to gather field information in regard to prospecting for oil and gas or the production thereof to lease or to become interested in any manner in any oil or gas lease on state lands.
History: En. Sec. 20, Ch. 108, L. 1927; amd. Sec. 4, Ch. 171, L. 1933; re-en. Sec. 1882.20, R.C.M. 1935; amd. Sec. 93, Ch. 428, L. 1973; R.C.M. 1947, 81-1720.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-409. Misconduct of officers in relation to oil and gas leases

77-3-409. Misconduct of officers in relation to oil and gas leases.
(1) Any officer, employee, or representative of the state who directly or indirectly accepts any money or any other valuable thing, except the officer's, employee's, or representative's regular and lawful compensation, for performing or not performing an official act under the provisions of this part or for modifying the performance of an official act is guilty of a felony.
(2) Any officer, employee, or representative of the state who knowingly and willfully makes any false classification or appraisal of any state land or interest of the state in the land or of any oil and gas deposits in which the state is interested or who knowingly and willfully makes any false report of any classification or appraisal is guilty of a felony.
History: En. Sec. 21, Ch. 108, L. 1927; re-en. Sec. 1882.21, R.C.M. 1935; R.C.M. 1947, 81-1721; amd. Sec. 2558, Ch. 56, L. 2009.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-410. False statements relating to oil and gas leases

77-3-410. False statements relating to oil and gas leases.
Any person who shall knowingly make and file in any department, bureau, or office of the state any application, statement, or report in writing required by regulation promulgated pursuant to the provisions of this part containing any false statement of a material fact shall be guilty of a felony.
History: En. Sec. 22, Ch. 108, L. 1927; re-en. Sec. 1882.22. R.C.M. 1935; R.C.M. 1947, 81-1722.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-411. Notice of lease sale required

77-3-411. Notice of lease sale required.
(1) Within 15 days of the previous oil and gas lease sale, the department shall publish the date and place of the upcoming sale in a publication of general circulation in Montana and on the department's website.
(2) (a) The department shall accept nominations of tracts for an upcoming sale until 77 days prior to the date of the sale.
(b) Upon receipt of a nomination by the department, the location of the tracts is public information.
(3) At least twice, the department shall publish a notice containing the time and place of the sale, a statement that all sales will be by competitive bidding, and the number of tracts in each county offered for sale at the time of the notice on the department's website and in a publication of general circulation in Montana:
(a) not less than 63 days before the date of an upcoming sale; and
(b) between 21 days and 35 days before the date of the sale.
(4) In a publication of general circulation in each county where a tract is nominated for sale, the department shall publish a notice in compliance with subsection (3), except that each notice needs to contain only the number of tracts nominated for sale in that county and notice that a description and maps of tracts nominated are available on the department's website.
(5) The department shall publish on its website a description and maps of all tracts to be offered for sale.
(6) (a) Except as provided in subsection (6)(b), the department shall provide notice by first-class mail to surface owners of a tract being offered for sale using the most current known property owners of record as shown in the records of the county clerk and recorder of the county where the tract is located.
(b) The notice in subsection (6)(a) is not required if the surface is managed by the department pursuant to Title 77, chapter 1.
(7) The notice required by subsection (6) must contain the time and place of the sale, a statement that all sales will be by competitive bidding, and a description and area map of each tract offered for sale.
History: En. Sec. 1, Ch. 432, L. 2009; amd. Sec. 1, Ch. 206, L. 2019.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-421. Duration of lease

77-3-421. Duration of lease.
(1) All state oil and gas leases entered by the board shall be granted for a primary term of not more than 10 years or less than 5 years and as long thereafter as oil or gas in paying quantities is produced, on condition that all drilling, rental, and other obligations are fully kept and performed by the lessee. However, leases for a period of less than 5 years may be issued if the board determines that such shorter term is necessary to ensure full compensation for the oil and gas resource.
(2) Oil or gas produced from any part of a unit in which state lands are included by virtue of a pooling agreement are considered to be produced from the state lands therein within the meaning of this part.
(3) The board may grant reasonable extensions of the primary term of a state oil or gas lease upon a showing that the lessee, despite due care and diligence, is or has been directly or indirectly prevented from exploring, developing, or operating the lease or is threatened with substantial economic loss, due to litigation regarding the lease or another lease in the immediate area held by the same lessee, state compliance with the Montana Environmental Policy Act, Title 75, chapter 1, parts 1 through 3, rules adopted under Title 75, chapter 1, or adverse conditions caused by natural occurrences.
History: En. Sec. 2, Ch. 108, L. 1927; amd. Sec. 1, Ch. 193, L. 1931; amd. Sec. 1, Ch. 171, L. 1933; re-en. Sec. 1882.2, R.C.M. 1935; amd. Sec. 1, Ch. 109, L. 1941; amd. Sec. 1, Ch. 91, L. 1943; amd. Sec. 1, Ch. 128, L. 1945; amd. Sec. 1, Ch. 122, L. 1953; amd. Sec. 84, Ch. 428, L. 1973; R.C.M. 1947, 81-1702(part); amd. Sec. 1, Ch. 165, L. 1983; amd. Sec. 1, Ch. 272, L. 1989.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-422. Lease extension clause

77-3-422. Lease extension clause.
If oil or gas is not being produced from the leased premises at the expiration of the primary term of the lease but the owner of the lease is then engaged in drilling on the premises for oil or gas, then the lease continues in force so long as such drilling operations are being diligently prosecuted. If oil or gas is recovered from any such well drilled or being drilled at or after the expiration of the primary term of the lease, the lease continues in force so long as oil or gas in paying quantities is produced from the leased premises.
History: En. Sec. 2, Ch. 108, L. 1927; amd. Sec. 1, Ch. 193, L. 1931; amd. Sec. 1, Ch. 171, L. 1933; re-en. Sec. 1882.2, R.C.M. 1935; amd. Sec. 1, Ch. 109, L. 1941; amd. Sec. 1, Ch. 91, L. 1943; amd. Sec. 1, Ch. 128, L. 1945; amd. Sec. 1, Ch. 122, L. 1953; amd. Sec. 84, Ch. 428, L. 1973; R.C.M. 1947, 81-1702(part).
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-423. Annual rental

77-3-423. Annual rental.
(1) The annual money rentals to be paid to the state for oil and gas leases must be set by the board but may not be less than $1.50 for each acre of land leased.
(2) In addition to the sum of $1.50 per acre, the rental for the first year of the lease must also include any sum in excess of $1.50 per acre offered and accepted for the first year's rental.
(3) The annual rental under this section may not be less than $100 a year.
(4) The first year's rental must be paid before the issuance of the lease. The rentals for each subsequent year of the lease are due and payable before the beginning of the subsequent lease year. Upon failure to make the rental payment, the lease terminates unless there is a well currently being drilled, a producing well, or a shut-in well approved by the department on the lease. Rental paid for any year must be credited against any royalty that accrues during that year.
History: En. Sec. 1, Ch. 161, L. 1955; amd. Sec. 12, Ch. 22, L. 1971; amd. Sec. 85, Ch. 428, L. 1973; amd. Sec. 1, Ch. 136, L. 1974; amd. Sec. 1, Ch. 379, L. 1975; R.C.M. 1947, 81-1702.1(1), (2); amd. Sec. 1, Ch. 163, L. 1989; amd. Sec. 1, Ch. 34, L. 1997.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-424. Power to terminate lease in absence of commencement of drilling or payment of delay drilling penalty

77-3-424. Power to terminate lease in absence of commencement of drilling or payment of delay drilling penalty.
(1) In every oil and gas lease granted after March 3, 1955, under this part there must be reserved to the board full power to declare termination of the lease at the end of the fifth year or any subsequent year of the primary term of the lease upon failure of the lessee to either:
(a) commence the drilling of a well for oil and gas upon the leased premises; or
(b) pay a delay drilling penalty as follows:
(i) for the sixth year of the lease $1.25 per acre per year; and
(ii) for the remainder of the primary term of the lease an amount per acre per year as the board may in its discretion determine.
(2) Notice of that determination must be given to the lessee, and if the lessee applies for a hearing thereon within 10 days after receipt of the notice, the determination becomes final only after the hearing has been held.
(3) This annual delay drilling penalty must be paid each year in advance. The board shall refund delay drilling penalties paid on a lease for any year in which the lessee commences drilling on that lease.
(4) If a well for oil and gas is commenced, the drilling of the well must be prosecuted with due diligence and dispatch to such depth as is necessary to make a reasonable test for oil or gas.
History: En. Sec. 2, Ch. 161, L. 1955; amd. Sec. 1, Ch. 251, L. 1965; amd. Sec. 86, Ch. 428, L. 1973; R.C.M. 1947, 81-1702.2(part); amd. Sec. 9, Ch. 15, L. 1979; amd. Sec. 5, Ch. 163, L. 1989.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-425. Dry hole clause

77-3-425. Dry hole clause.
If the first well drilled is a dry hole and if a second well is not commenced on the land covered by the lease before the next anniversary of the lease following the completion of the well, the lease may be terminated by the board unless the lessee, on or before such anniversary, resumes payment of any delay drilling penalties imposed by the board. Upon the resumption of payment of any required delay drilling penalties and their continued payment, the lease continues in force during the primary term as though there had been no interruption in the delay drilling penalty payments.
History: En. Sec. 2, Ch. 161, L. 1955; amd. Sec. 1, Ch. 251, L. 1965; amd. Sec. 86, Ch. 428, L. 1973; R.C.M. 1947, 81-1702.2(part); amd. Sec. 2, Ch. 163, L. 1989.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-426. Lessee to prevent waste

77-3-426. Lessee to prevent waste.
Oil and gas leases issued under the provisions of this part must all be subject to the conditions that the lessee in conducting explorations and mining or drilling operations shall use all reasonable precautions to prevent waste of oil or gas developed in the land or the entrance of water through wells drilled by the lessee to the oil or gas sands or oil-bearing or gas-bearing strata to the destruction or injury of the oil or gas deposits. Violations of any of these conditions constitutes grounds for the forfeiture of the lease after a hearing on the violations before the board.
History: En. Sec. 1, Ch. 108, L. 1927; re-en. Sec. 1882.1, R.C.M. 1935; amd. Sec. 1, Ch. 90, L. 1943; amd. Sec. 1, Ch. 261, L. 1947; amd. Sec. 6, Ch. 184, L. 1961; R.C.M. 1947, 81-1701(part); amd. Sec. 2559, Ch. 56, L. 2009.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-427. Provision for offset wells -- compensatory royalties

77-3-427. Provision for offset wells -- compensatory royalties.
(1) Oil and gas leases granted by the state shall contain suitable provisions imposing upon all lessees the obligation to drill offset wells wherever and whenever necessary to prevent waste and damage to the property of the state.
(2) The board may allow the lessee the following options in lieu of drilling an offset well:
(a) releasing the lands in question; or
(b) paying a compensatory royalty on a nonproducing lease if the board determines that such compensatory royalty will fully compensate the state for waste and damage to the property of the state. The compensatory royalty shall be based upon the estimated drainage, as determined by the board, and shall be paid on a monthly basis unless circumstances require otherwise.
(3) If the board or the lessee terminates the lease, that termination does not impair any implied covenant against drainage or the right of the board to seek damages from the lessee for the lessee's failure to protect the lease from drainage of oil or gas by a well adjacent to the state lease.
History: En. Sec. 19, Ch. 108, L. 1927; re-en. Sec. 1882.19, R.C.M. 1935; R.C.M. 1947, 81-1719(part); amd. Sec. 1, Ch. 81, L. 1981; amd. Sec. 3, Ch. 163, L. 1989.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-428. Additional development following completion of productive well

77-3-428. Additional development following completion of productive well.
(1) The lessee shall be required, upon completing a commercially productive oil or gas well upon the leased premises, to proceed with reasonable diligence to drill such additional wells to the depth of the formation found commercially productive or to such depth as may be necessary to economically test, develop, and operate the deposits discovered.
(2) No lessee shall, however, be required to drill to completion more than one well under any one lease during any one calendar year or a total number of wells under any one lease in excess of the total number of 40-acre subdivisions of land held under such lease. As to lands found valuable for gas production only, the drilling obligation of the lessee shall be confined to a total number of wells equal to the total number of tracts comprising 160 acres of land included in the lease, except as the drilling of offset oil or gas wells necessary to protect the leased premises and deposits from loss or depletion due to wells drilled on contiguous lands shall require greater diligence in drilling and a greater number of wells to be drilled.
(3) The performance of said well drilling operations may be suspended only by and with the consent of the board during the time oil or gas previously discovered cannot be marketed at a profit or for other good cause shown.
History: En. Sec. 11, Ch. 108, L. 1927; re-en. Sec. 1882.11, R.C.M. 1935; R.C.M. 1947, 81-1711.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-429. Operating agreements

77-3-429. Operating agreements.
Owners of state oil and gas leases may enter into agreements with other persons, associations, firms, and corporations for drilling and other operations on the state lands under their leases. No such operating agreements are in any way binding upon the state until filed with the board and approved by it. No such drilling or operating agreement in any way affects the obligations of each individual leaseholder to the state.
History: En. Sec. 2, Ch. 108, L. 1927; amd. Sec. 1, Ch. 193, L. 1931; amd. Sec. 1, Ch. 171, L. 1933; re-en. Sec. 1882.2, R.C.M. 1935; amd. Sec. 1, Ch. 109, L. 1941; amd. Sec. 1, Ch. 91, L. 1943; amd. Sec. 1, Ch. 128, L. 1945; amd. Sec. 1, Ch. 122, L. 1953; amd. Sec. 84, Ch. 428, L. 1973; R.C.M. 1947, 81-1702(3).
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-430. Pooling agreements and unit operations

77-3-430. (Temporary) Pooling agreements and unit operations.
Nothing contained in this or in prior related laws prevents the board from entering into agreements for the pooling of acreage with others for unit operations for the production of oil or gas or both and the apportionment of oil or gas royalties or both on an acreage or other equitable basis and from modifying leases with respect to delay rentals, delay drilling penalties, and royalties in accordance with such pooling agreements and such unit plans of operation. However, such agreements may not change the percentage of royalties to be paid to the state from the percentages as fixed in its leases. The board may modify existing pooling and unit agreements so as to commit the state lands included therein for as long as the unitized substance or substances for which the state lands are committed is produced from any lands in the unit.
77-3-430. (Effective on occurrence of contingency) Pooling agreements and unit operations.
Nothing contained in this or in prior related laws prevents the board from entering into agreements for the pooling of acreage with others for unit operations for the storage of carbon dioxide in a geologic storage reservoir or the production of oil or gas or both and the apportionment of oil or gas royalties or both on an acreage or other equitable basis and from modifying leases with respect to delay rentals, delay drilling penalties, and royalties in accordance with pooling agreements and unit plans of operation. However, agreements may not change the percentage of royalties paid to the state from the percentages fixed in its leases. The board may modify existing pooling and unit agreements to commit the state lands included in the pooling or unit agreements for as long as the unitized substance or substances for which the state lands are committed are produced from any lands in the unit.
History: En. Sec. 2, Ch. 108, L. 1927; amd. Sec. 1, Ch. 193, L. 1931; amd. Sec. 1, Ch. 171, L. 1933; re-en. Sec. 1882.2, R.C.M. 1935; amd. Sec. 1, Ch. 109, L. 1941; amd. Sec. 1, Ch. 91, L. 1943; amd. Sec. 1, Ch. 128, L. 1945; amd. Sec. 1, Ch. 122, L. 1953; amd. Sec. 84, Ch. 428, L. 1973; R.C.M. 1947, 81-1702(4); amd. Sec. 10, Ch. 474, L. 2009.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-431. Report of lessees

77-3-431. Report of lessees.
(1) On or before the last day of each month every holder of a producing oil or gas lease shall make a report to the department for the preceding calendar month on a form the department prescribes. The report shall show the amount of oil or gas produced and saved during the preceding month, the price obtained, the total amount of all sales, and any additional information as may be required, and it shall be signed by the lessee or some responsible person having knowledge thereof.
(2) Oil and gas leases granted by the state shall contain suitable provisions imposing upon all lessees the obligation to make such report of operation, production, and sales in the manner, at the time, and to such representative of the state as may be required by the board.
History: (1)En. Sec. 5, Ch. 108, L. 1927; re-en. Sec. 1882.5, R.C.M. 1935; amd. Sec. 2, Ch. 122, L. 1953; amd. Sec. 1, Ch. 171, L. 1963; amd. Sec. 87, Ch. 428, L. 1973; Sec. 81-1705, R.C.M. 1947; (2)En. Sec. 19, Ch. 108, L. 1927; re-en. Sec. 1882.19, R.C.M. 1935; Sec. 81-1719, R.C.M. 1947; R.C.M. 1947, 81-1705(part), 81-1719(part).
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-432. Royalty

77-3-432. Royalty.
In each oil and gas lease granted by the state under this part, there must be reserved to the state as consideration for the lease a royalty in all oil and gas produced and saved from all lands covered by the lease and not used for light, fuel, and operation purposes on the leased premises, which must be equivalent to the full market value, as ascertained by the board at the date of the lease, of the estate or interest of the state in the lands and oil and gas deposits disposed of under the lease. The royalty reservation must be set by the board but may not be less than 12 1/2% on gas and not less than 12 1/2% on oil or casinghead gasoline for each producing well for the calendar month. The state may share the expense of transporting the oil to the nearest market on a basis proportional to the state's royalty interest in the oil and at a rate per mile acceptable to the department.
History: En. Sec. 4, Ch. 108, L. 1927; re-en. Sec. 1882.4, R.C.M. 1935; amd. Sec. 1, Ch. 61, L. 1951; amd. Sec. 1, Ch. 103, L. 1965; amd. Sec. 2, Ch. 379, L. 1975; R.C.M. 1947, 81-1704(part); amd. Sec. 1, Ch. 136, L. 1987; amd. Sec. 4, Ch. 163, L. 1989; amd. Sec. 2, Ch. 34, L. 1997.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-433. Shut-in gas royalty

77-3-433. Shut-in gas royalty.
The royalty on gas, including casinghead gas and all gaseous substances not sold or used off the premises, must be at the rate of $400 per lease each year or the amount of the annual rental provided in the lease, whichever is the greater, payable on or before the annual anniversary date of the lease. As long as the leased lands contain a well capable of production in paying quantities and the requisite payment is made, the lease must be considered as a producing lease under the lease terms.
History: En. Sec. 4, Ch. 108, L. 1927; re-en. Sec. 1882.4, R.C.M. 1935; amd. Sec. 1, Ch. 61, L. 1951; amd. Sec. 1, Ch. 103, L. 1965; amd. Sec. 2, Ch. 379, L. 1975; R.C.M. 1947, 81-1704(part); amd. Sec. 3, Ch. 34, L. 1997.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-434. Manner of making royalty payment

77-3-434. Manner of making royalty payment.
Such lease shall provide for the rendering of payment of such royalty on all oil and gas produced and saved and sold or used off the premises in the following manner and upon the following terms:
(1) the lessee shall pay to the state in cash, for all oil and gas royalty reserved, the posted field price existing on the day such oil or gas is run into any pipeline or storage tank to the credit of the lessee, plus any bonus actually paid or agreed to be paid to the lessee for such oil or gas; or
(2) at the option of the state exercised in writing by the board not oftener than every 30 days, the lessee shall deliver the state's royalty oil or gas free of cost or deductions into the pipeline to which the wells of the lessee may be connected or into any storage designated by the state and connected with such wells.
History: En. Sec. 4, Ch. 108, L. 1927; re-en. Sec. 1882.4, R.C.M. 1935; amd. Sec. 1, Ch. 61, L. 1951; amd. Sec. 1, Ch. 103, L. 1965; amd. Sec. 2, Ch. 379, L. 1975; R.C.M. 1947, 81-1704(part).
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-435. Payments due to state -- audit -- notice -- action

77-3-435. Payments due to state -- audit -- notice -- action.
(1) The report under 77-3-431 must be accompanied by payment of the amount due the state as royalty for the month covered by the report unless the state's royalty is being or has been paid directly by the purchaser. However, when the amount of royalty due from a lease is determined by the board to be so small as to make it uneconomical to collect monthly, the board may authorize royalty payments to be made semiannually.
(2) Oil and gas leases granted by the state must contain suitable provisions imposing upon all lessees the obligation to make payments due the state in the manner, at the time, and to the representative of the state that may be required by the board.
(3) Except as provided in subsection (4), the department may, within 7 years of the filing of a report pursuant to 77-3-431, commence an audit of a lessee's or a former lessee's operation to determine whether the report is complete and accurate and whether all royalties owed have been paid. The department shall notify the lessee in writing of the audit. The notice must describe the period for which the audit is being conducted. Upon conclusion of the audit, the department shall notify the lessee of the department's conclusions and, if the department has determined that additional royalties are owed, the basis for that determination. An action to compel payment of royalties due must be commenced within 2 years of the date of mailing the notice.
(4) If a lessee or former lessee, with intent to evade payment of royalties, purposely or knowingly files a false report or purposely or knowingly fails to pay royalties owed, the department may conduct an audit and file an action to collect royalties at any time after the royalty is due.
History: (1)En. Sec. 5, Ch. 108, L. 1927; re-en. Sec. 1882.5, R.C.M. 1935; amd. Sec. 2, Ch. 122, L. 1953; amd. Sec. 1, Ch. 171, L. 1963; amd. Sec. 87, Ch. 428, L. 1973; Sec. 81-1705, R.C.M.; (2)En. Sec. 19, Ch. 108, L. 1927; re-en. Sec. 1882.19, R.C.M. 1935; Sec. 81-1719, R.C.M. 1947; R.C.M. 1947, 81-1705(part), 81-1719(part); amd. Sec. 4, Ch. 34, L. 1997.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-436. Disposition of royalties and other money

77-3-436. Disposition of royalties and other money.
All fees, rentals, penalties, royalties, and bonuses collected for or under state oil and gas leases shall be paid to the department and credited as follows:
(1) All fees and penalties shall be credited to the state general fund.
(2) All rentals shall be credited to the income fund of the grant to which the lands under each lease belong.
(3) All moneys collected as royalties and bonuses shall be credited to the permanent fund arising from the grant to which the land under each particular lease belongs and become and forever remain an inseparable and inviolable part thereof. However, all royalties and bonuses collected from the lands forming part of the capitol building grant shall be available as income, the same as all other receipts from such lands.
(4) All moneys received as rentals, royalties, and bonuses for or under leases on state lands and not held in trust for the public schools of the state or for any state institution shall be credited to the state general fund unless other disposition is provided by law.
History: En. Sec. 12, Ch. 108, L. 1927; re-en. Sec. 1882.12, R.C.M. 1935; amd. Sec. 44, Ch. 100, L. 1973; amd. Sec. 89, Ch. 428, L. 1973; R.C.M. 1947, 81-1712; amd. Sec. 1, Ch. 353, L. 1985.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-437. Amendment of existing leases

77-3-437. Amendment of existing leases.
The owner or owners of any existing state oil and gas lease shall have the right to exchange it for an amended lease containing the same provisions as to the term of said lease as are then provided by law for state oil and gas leases upon filing a written application therefor and upon payment of a sum which is the full market value of the exchange, as determined by the board. The amended lease shall be subject to all other provisions, including rents and royalties, contained in the original lease and shall bear the same commencement date as the original lease.
History: En. Sec. 8, Ch. 108, L. 1927; re-en. Sec. 1882.8, R.C.M. 1935; amd. Sec. 3, Ch. 122, L. 1953; R.C.M. 1947, 81-1708.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-438. Assignments of leases

77-3-438. Assignments of leases.
(1) The assignment of any oil and gas lease issued under this part, either in whole or as to subdivisions of land embracing not less than 40 acres covered thereby, made to an assignee qualified as provided herein is permitted. Such assignment is not, however, binding upon the state until filed with the department and accompanied by the required fees, together with such proof of qualifications required by the board, and approved by the board or its lawful representative. The approval of any assignment so filed and supported may not be withheld in any case where the rights or interest of the state in the property assigned will not in the judgment of the board be prejudiced thereby, and the decision of the board in all cases is subject to appeal upon proper court proceedings.
(2) All other assignments of oil and gas leases issued under this part or interests therein are subject to approval by the board and are binding upon the state in the discretion of the board.
History: En. Sec. 16, Ch. 108, L. 1927; re-en. Sec. 1882.16, R.C.M. 1935; amd. Sec. 90, Ch. 428, L. 1973; R.C.M. 1947, 81-1716.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-439. Surrender of leases

77-3-439. Surrender of leases.
The lessee under any oil and gas lease granted by the state may at the termination of any rental year, by giving to the department 30 days' previous notice in writing, surrender and relinquish the lease to the state in whole or as to any legal subdivision of the lands covered thereby and be discharged from any obligation not yet accrued as to lands so surrendered and relinquished without prejudice to the continuance of the lease as to lands not surrendered or relinquished.
History: En. Sec. 18, Ch. 108, L. 1927; re-en. Sec. 1882.18, R.C.M. 1935; amd. Sec. 92, Ch. 428, L. 1973; R.C.M. 1947, 81-1718.
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-440. Forfeiture and cancellation of leases

77-3-440. Forfeiture and cancellation of leases.
(1) All oil and gas leases granted by the state pursuant to the terms of this part shall provide for forfeiture and cancellation thereof upon failure of the lessee to fully discharge the obligations provided therein, after written notice from the state and reasonable time allowed to the lessee for performance of any undertaking or obligation specified in such notice concerning which the lessee is in default.
(2) Any lessee, upon application therefor, shall be granted a hearing on any notice or demand of the board before any lease is declared forfeited or canceled by the board.
History: En. Sec. 10, Ch. 108, L. 1927; re-en. Sec. 1882.10, R.C.M. 1935; R.C.M. 1947, 81-1710(part).
2023 Montana Code Annotated › Title 77. State Lands › Chapter 3. Rock, Mineral, Coal, Oil, and Gas Resources › Part 4. Oil and Gas › 77-3-441. Restriction on new lease following termination of old lease

77-3-441. Restriction on new lease following termination of old lease.
In all cases where an oil and gas lease issued after March 3, 1955, is surrendered for cancellation before its expiration, relinquished to the state, or canceled through proceedings on the part of the state, no new lease on the lands under such lease may be issued within 30 days from the date of cancellation or relinquishing. This restriction does not apply, however, in cases of bona fide assignment.
History: En. Sec. 1, Ch. 161, L. 1955; amd. Sec. 12, Ch. 22, L. 1971; amd. Sec. 85, Ch. 428, L. 1973; amd. Sec. 1, Ch. 136, L. 1974; amd. Sec. 1, Ch. 379, L. 1975; R.C.M. 1947, 81-1702.1(4).