Texas Smackover Lithium Play
As the Smackover (SMK) Lithium (Li) play picks up steam we need to acknowledge that from regulatory and legal standpoints, there will be significant differences between the play in South Arkansas and in East Texas. Very soon we expect to know more about royalty provisions and regulatory guidelines. From past experience with dissimilarities between Texas and Louisiana mineral laws and regulatory statutes governing the Haynesville Shale, we hope to limit confusion and make it easier to access the information that will be pertinent to land and mineral owners.
In order to help members and quests to the website and to avoid confusion, we will start two new discussions, one for Texas and one for Arkansas. There is an abundance of information in the original SMK Lithium discussion threads and members may want to click on them and then save them to their computer bookmarks/favorites to be able to access them in the future as they will eventually rotate off the main page. After 24 hours, comments in those discussions will be closed but the replies will remain available in the website archive. Archived discussions are available by using the search box in the upper right corner of all website pages.
GoHaynesvilleShale.com was one of the first resources for mineral owners to learn basics, share information and generally provide a place where mineral owners could become more informed managers of their mineral assets in the age of the Internet. The website is pleased to continue to provide those services to those who will benefit from the SMK Lithium Play. Please keep in mind two things. You are a key part of the on the ground intelligence network by letting your friends and neighbors know about GoHaynesvilleShale.com and encouraging them to participate in site discussions. And since GoHaynesvilleShale.com is free for all to use, please consider a donation to help keep the website online.
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Replies to This Discussion
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Permalink Reply by Chad Ellis on
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The royalty on the oil and gas needs to be closer to 1/5 (20%) or better. Depending on location and size of tract.
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Permalink Reply by Skip Peel - Mineral Consultant on
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I agree with Chad.
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Permalink Reply by phoenix on
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I agree to negotiate the best royalty that you can get. Also, to be sure to know what all other rights they may acquire under the agreement.
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Permalink Reply by Skip Peel - Mineral Consultant on
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I agree phoenix. Other terms of a lease are important. Prohibiting or limiting the lessees ability to take post production deductions and rights of surface use or the total prohibition of surface use will also be important for some. An experienced professional can help point out all the terms that will be important based on the details of the mineral owner's interest.
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Permalink Reply by Lisa on -
Thanks!! Chad’s comment seems to be missing? Any summary of it?
The attorney addressed thoroughly all that you’ve mentioned.
The idea of a flat fee royalty WITH the percentage sounds intriguing!!!
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Permalink Reply by Skip Peel - Mineral Consultant on
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Lisa, I don't think Chad's comments are missing. His one reply is all he posted. When a member makes a reply and it remains in a discussion past the time allowed for editing, they can delete it but the reply box remains with the notation that the reply was deleted. You should be good to go if your attorney has covered what was mentioned.
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Permalink Reply by Lisa
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So we’re to the contract negotiation regarding the royalties. We know the percentage is not the whole story— percentage of what!?!?!
How do we phrase the gross or net — how do we define its boundaries?
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Permalink Reply by Skip Peel - Mineral Consultant
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Royalty is usually based on volume and price. The few comments that I recall would be in the Arkansas lithium discussions. I suspect the lease term that is equally important is the specter of post production deductions. It would be my priority to get a "no cost" royalty clause.
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Permalink Reply by Lisa
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That’s what we had and they seemed to think that was too much to expect— we’re going to see what they counter with.
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Permalink Reply by Skip Peel - Mineral Consultant
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No need to rush since production will not start and royalties will not flow until 2027 or later. Wait 'em out.
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Permalink Reply by Lisa
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I think they are ready to evaluate where they will put the DLE plant in our area. We are some of the last to sign a lease. Sooooo there is a push to get our land wrapped up. We have good terms— but we haven’t seen the phrasing for the percentage royalty— that is what the percentage is applied to. We had phrasing they said they would not accept.
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Permalink Reply by Skip Peel - Mineral Consultant
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It will be a long time before a plant is in operation. If you have enough acreage should be okay to wait.
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