36.25.409 OVERRIDING ROYALTY INTERESTS
(1) If an overriding royalty interest is created which
is not shown in the instrument of assignment or transfer, a statement must be
filed with the director describing the interest. Any such assignment will be
deemed valid if accompanied by a statement over the assignee's signature that
the assignee is a person as defined in the rules. All assignments of overriding
royalty interests without a working interest and otherwise not contemplated by
ARM 36.25.408, must be filed for record in the office of the department in
Helena within 90 days from the date of execution. Such interests will not
receive formal approval and will be recognized as a transfer of title only
without recognition of the overriding royalty interests.
(2) No overriding royalty on the
production of geothermal resources created by an assignment contemplated by ARM
36.25.408 or otherwise shall exceed 5% nor shall an overriding royalty, when
added to overriding royalties previously created exceed 5%.
(3) The creation of an
overriding royalty interest that does not conform to the requirements of this
rule shall be deemed a violation of the lease terms, unless the agreement
creating overriding royalties provides for a prorated reduction of all
overriding royalties so that the aggregate rate of overriding royalties does
not exceed 5%.
(4) In addition to the foregoing
limitations, any agreement to create or any assignment creating royalties or
payments out of production from the leased lands shall be subject to the
authority of the board, after notice and hearing, to require the proper parties
thereto to suspend or modify such royalties or payments out of production in
such manner as may be reasonable when and during such periods of time as they
may constitute an undue economic burden upon the reasonable operations of such
History: 77-4-103, MCA; NEW, Eff. 12/31/72; AMD, Eff. 3/7/75; TRANS, 1996 MAR p. 2384.