Our family years back had a farm that had a hill with gravel in it.  My parents sold gravel to a contractor for putting gravel on roads and also for blacktopping.  Since they (parents) owned the mineral rights they got 15% depletion allowance, which was a deduction off their income.  The gravel sold became ordinary income, for income tax purpose.  A farmer that holds the mineral rights where an oil well is drilled, is probably getting the 15% or is sharing it with the contractor.  It probably is not going to the oil company.  Reading the IRS web site, the depletion allowance for minerals and oil is only allowed in the U.S. where it is taken out of the ground, and not allowed in a foreign country.  Since over half of our oil is imported, the depletion allowance would not apply to the imported oil.