Per Expert @DianeW777:
"It depends whether it is a working interest or royalties when determining the correct way to report the income.
If you are an independent contractor or self-employed in a business related to a working interest in the oil or gas, you must report the royalty income on Schedule C instead of Schedule E and generally will be subject to self-employment tax. If your royalty is a working interest, the income is listed in Box 1, Form 1099-NEC.
Expenses are allowed on either form (Schedule C or Schedule E)."
It appears that your 1099-NEC is for a working interest, with an amount in Box 1. Report this as Self Employment Income, and enter expenses against the income, on Schedule C.
However, if you believe it is a Royalty Payment, enter your 1099-NEC as it it were a 1099-Misc, with the amount in Box 2. This reports the income on Schedule E as Rent/Royalties.
Here's more info on Reporting 1099-NEC as Royalty Income.
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