Yes - since the royalties were actually produced on property located in CO, then you would need to file a CO nonresident tax return to report this CO sourced royalties.
According to the Colorado Department of Revenue, if you are a nonresident, you would have to file a Colorado state tax return if you are required to file a federal tax return and you had any income from Colorado sources.
Income from Colorado sources includes income from a business, trade, occupation or profession carried on in Colorado, including payments for work performed in Colorado as an employee or independent contractor. Rents or royalties from real or tangible personal property located in Colorado, or the gain or loss on the sale or disposition of that property would be Colorado source income.
Please note that you will be able to claim a state tax credit in MT for any taxes paid to CO on income that is being taxed in both states.
Here
is additional information about filing in multiple states (select "see
more answer" to view the entire attachment)
