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Permalink Reply by Skip Peel - Mineral Consultant on Wednesday

There is no royalty hearing at this time on the Arkansas O&G Commission agenda.  The April agenda has not been published.  I'm not sure that Arkansas's royalty decision will be relevant for Texas.  At this point Texas has no definitive court decision on the ownership of brine.  The legislature has not ruled and the existing case law I believe is being appealed.  Texas lessees and lessors are on their own to strike a deal for a brine lease.  Standard Lithium has announced that the highest concentrations of lithium that they have sampled are in Franklin County.

Excerpt.

The Smackover Lithium JV, in partnership with Equinor, continues the successful mineral leasing program in East Texas (“ETX”). SLI first started extensive mineral leasing in the most prospective areas of the Smackover Formation in East Texas in 2022. Since the formation of the JV in May 2024, it has continued to grow the acquired lease position, and is now actively leasing within a total area of 185,000 acres across several Counties in East Texas;

The first ETX project area of approximately 67,000 acres has been identified. This project area is centered on Franklin County, and the Company has previously drilled three exploratory boreholes in and adjacent to this project area and reported the highest known lithium in brine grades in North America (maximum lithium grade of 806 mg/L reported). Some of the existing wells will be resampled during Q2 and Q3 of this year, and it is expected that a maiden Inferred Resource Report for this highly prospective lithium resource will be published in Q3 of this year;

 

https://finance.yahoo.com/news/standard-lithium-provides-corporate-...

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Permalink Reply by Lisa on Wednesday

Thanks for the article!! I’m off to read it!

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Permalink Reply by Lisa on Wednesday

In entering a lease, I’m just looking for royalty examples from Texas landowners around me and Arkansas’s final decision just to inform what I ask for. I know I’m on my own as a Texas landowner, and I’m glad for the freedom— but it’s a lot of responsibility to be educated and up-to-date.

Right now, I’m leaning towards the bonus they’ve offered plus a percentage royalty instead of the flat fee offered. Some folks in our county got 12.5% but with a different company than is leasing in my particular area (joined acreage). My understanding is that the company offering us a lease is unwilling to go to 12.5%. I want to be educated when I start the bargaining process.

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Permalink Reply by Skip Peel - Mineral Consultant on Wednesday

Leases are not being filed in the public record, only memorandums of lease so royalty rates are simply rumors at this point.  I would think that 12.5% appears to be the top of the market currently for royalty.  Bonus offers are not widely reported however my rule is, the more acres - the higher the bonus.  I also usually advise to not warrant title but that can depend on how strong the chain of title is recorded in the public record and how sure the owner is on their title.  I suspect you know that , Lisa.

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Permalink Reply by Lisa on Wednesday

I actually don’t know what “warrant the title” means. I inherited the land from my dad, who inherited from his dad, who inherited . . . back to my great great grandfather. Is that the chain of title?

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Permalink Reply by Skip Peel - Mineral Consultant on Wednesday

Texas title can be quite complicated when it comes to mineral ownership since the mineral ownership can be severed from the surface estate in perpetuity.  If you lease with a warrant of title that means you are obligated to defend the title against anyone who might claim an interest.  A complete chain of title would be recorded in the public record back to the person who acquired the right and even further back to confirm that he/she received a full 100% of the right.  Often times all the way back to the sovereign.

Where money is involved or anticipated sometimes unknown heirs can come out of the woodwork.  Many Texas families failed to record successions with accurate descriptive lists at the passing of each owner.  If there were numerous heirs over the generations or children from multiple marriages, it can be a headache.

If you own the surface and the entire mineral right, you should be okay no matter how the ownership of brine is eventually settled in Texas.  Right now it is a "ground water" question and the surface owner holds the rights to the ground water.  In that case, the mineral estate does not own the brine or its constituent elements as far as I can tell.

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