Good morning. This is The Iron Horse Daily Brief for Thursday, October 16th, 2025. Yesterday we broke down working interests—the most tax-advantaged investment structure in America. Today, we're covering the other side of the coin: What is a royalty interest? If you've ever been pitched on oil and gas investments, you've probably heard both terms thrown around. But understanding the difference between a working interest and a royalty interest is critical, because they offer completely different benefits, risks, and tax treatments. **WHAT IS A ROYALTY INTEREST?** A royalty interest is a passive ownership stake in the production of an oil or gas well. You don't participate in the drilling or operating costs. You simply receive a percentage of the revenue generated from the well's production—free and clear of expenses. Think of it like owning a piece of the well's income stream without any of the operational responsibility. **WHY THAT MATTERS:** With a royalty interest, you're not writing checks every month to cover operating costs. You're not responsible for maintenance, repairs, or water disposal. You just collect your share of the revenue when the well produces. That makes royalty interests attractive for investors who want exposure to oil and gas without the hands-on involvement or monthly expenses. But here's the trade-off: royalty interests don't offer the same tax advantages as working interests. Because you're not actively participating in the business of drilling and operating the well, you don't get to deduct intangible drilling costs. You don't get that 80 to 85 percent first-year tax deduction. Your income from a royalty interest is treated as passive income, and while you can deduct a 15 percent depletion allowance, it's nowhere near the tax benefits of a working interest. **THE BOTTOM LINE:** Royalty interests are simpler. They're passive. They're lower risk in terms of monthly cash flow volatility. But they're also lower reward—both in terms of upside potential and tax savings. If you're a high-earner looking to offset W-2 income and maximize tax deductions, a royalty interest won't get you there. That's why Iron Horse Energy Fund 1 is structured around working interests, not royalties. We're targeting investors who want the full tax advantage, the monthly distributions, and the upside that comes with active participation. The fund closes November 30th—46 days from today. If you're serious about diversifying your portfolio, generating cash flow, and keeping more of your money out of the IRS's hands, visit JoinIronHorse.com. That's your brief for Thursday, October 16th. Tomorrow, we'll be back with the latest market data and what's moving oil prices. See you then. --- If today's brief resonated and you're serious about tax-advantaged oil and gas investments, visit JoinIronHorse.com right now. Courtney Moler is the go-to expert for accredited investors who want to keep more of what they earn. Iron Horse Energy Fund 1 is filling up fast. Don't wait. JoinIronHorse.com.