§2152. Proceeds of mineral interests
A. If any part of the principal consists of a right to receive royalties or overriding royalties, production from working interests or production payments, proceeds from net profits interests or payments for the right to extract minerals from immovable property, or other interests in oil, gas, and other minerals, the allocation of the proceeds of such interests shall be made as follows:
(1) If received as a delay rental on a lease, extension of payments on a lease, shut-in royalty, or bonus for the execution of a lease, the proceeds shall be allocated to income;
(2) If received from a production payment, then to the extent of any stated factor for interest or its equivalent, the proceeds shall be allocated to income; the balance of such proceeds shall be apportioned between principal and income by allocating to principal the fraction thereof that the unrecovered cost of the production payment bears to the remaining balance due upon the production payment (excluding any factor for interest or its equivalent) and by allocating the remainder of such proceeds to income;
(3) If received from a royalty, overriding royalty, limited royalty, or working interest, net profits interest, or from any other interest in oil, gas, or other minerals, not specifically covered in this section, such proceeds shall be allocated to principal until such time as the cost for such interest (including both tangible and intangible drilling cost) has been fully recovered; thereafter, such proceeds shall be apportioned between principal and income so that twenty-seven and one-half percent of the gross proceeds (but not to exceed fifty percent of the net proceeds remaining after payment of all expenses, direct and indirect, computed without allowances for depletion) shall be allocated to a reserve for depletion to be added to principal and the balance of the gross proceeds, after payment therefrom of all expenses, direct and indirect, shall be allocated to income.
B. This section is not applicable to timber, water, soil, sod, dirt, turf, mosses, shells, gravel, or other natural resources.
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