It appears that you can take the depletion deduction. This is what the IRS states:
Who Can Claim Depletion?
If you have an economic interest in mineral property or standing timber, you can take a deduction for depletion. More than one person can have an economic interest in the same mineral deposit or timber. In the case of leased property, the depletion deduction is divided between the lessor and the lessee.You have an economic interest if both the following apply.
• You have acquired by investment any interest in mineral deposits.
• You have a legal right to income from the extraction of the mineral to which you must look for a return of your capital investment.
A contractual relationship that allows you an economic or monetary advantage from products of the mineral deposit or standing timber is not, in itself, an economic interest. A production payment carved out of, or retained on the sale of, mineral property is not an economic interest.
The complete IRS publication (page 35):
It appears that you can take the depletion deduction. This is what the IRS states:
Who Can Claim Depletion?
If you have an economic interest in mineral property or standing timber, you can take a deduction for depletion. More than one person can have an economic interest in the same mineral deposit or timber. In the case of leased property, the depletion deduction is divided between the lessor and the lessee.You have an economic interest if both the following apply.
• You have acquired by investment any interest in mineral deposits.
• You have a legal right to income from the extraction of the mineral to which you must look for a return of your capital investment.
A contractual relationship that allows you an economic or monetary advantage from products of the mineral deposit or standing timber is not, in itself, an economic interest. A production payment carved out of, or retained on the sale of, mineral property is not an economic interest.
The complete IRS publication (page 35):