BY: David Luke, AMM President | Andrew Blackburn, CPL, Mineral Manager | Will Stanley, MEB, Mineral Manager
While Argent Mineral Management (“AMM”) focuses primarily on its management of oil and natural gas activity for its mineral owners, the recent escalation of lithium activity in the U.S. has provided AMM the opportunity to speak up for—and hopefully eventually manage production of—the rights of our owners for this very sought-after critical mineral.
There have been quite a few developments in the lithium play in Southwest Arkansas and East Texas, as it appears momentum continues to build toward commercial-scale Direct Lithium Extraction (DLE). We will break down some of these developments by state:
Arkansas Update
Production Units Established
On April 22, the Arkansas Oil and Gas Commission (AOGC) approved three applications for units:
- Tetra Technologies: 815-acre expansion of its existing 6,138-acre “Evergreen Brine Unit” in Lafayette and Columbia Counties.
- Saltwerx (ExxonMobil): 56,246-acre “Pine Brine Unit” in Lafayette and Miller Counties.
- Smackover Lithium (SWA Lithium): 20,854-acre “Reynolds Brine Unit” in Lafayette and Columbia Counties.
These three units are depicted below:
The significance of unitization is that it accomplishes the following:
- Integrates/pools tracts of land into a production unit (royalties will eventually be paid to landowners based on their proportional interest in the unit);
- Establishes operational control of the unit, and;
- Allows the operator to apply to the AOGC for a royalty rate to be set for mineral owners in the unit.
Operators have floated initial commercial production dates in the 2027–2028 timeframe.
Royalty Rate Set
On the heels of the unit approval, SWA Lithium applied to the AOGC for a 2.5% royalty rate on lithium extracted from the Reynolds Unit. In addition, SWA requested an in-lieu royalty as paid for bromine, currently $65.05/acre annually (Brine Fee). SWA anticipates lithium carbonate production of 22,500 tonnes per year from the Reynolds Unit. Citing multiple global lithium projects in the application, SWA claims the proposed rate to be fair and equitable. A hearing on this matter was held before the AOGC on May 28 in Magnolia, Arkansas. After a half-day of testimony from both supporters and opponents of the proposed royalty rate, the AOGC unanimously approved the application from SWA. In the weeks that followed, the domino effect commenced, as we anticipated, with the same royalty rate being approved for both the Pine Brine Unit and the Evergreen Unit.
New Tax Incentives
On April 23, Governor Sanders signed Senate Bill 568 (now Act No. 1012) to further encourage investment in lithium projects in Arkansas. The act will “create a sales-and-use tax exemption for a qualified firm for purchases and sales by a qualified facility, which would be a for-profit business engaged in developing lithium, cathode, anode, lithium battery, and grid storage facility equipment.” This tax incentive will go into effect on October 1, 2025.
Texas Update
Texas Railroad Commission Rule 3.82
Effective February 18, 2025, the Texas Railroad Commission (Commission) adopted Statewide Rule 3.82 (SWR 3.82) to implement Texas SB 1186’s amendments to the Texas Water Code, clarifying the Commission’s authority over brine mining and the associated “spent brine return injection wells.” However, it’s important to note that these wells, classified as Class V Injection Wells, are currently regulated and enforced by the EPA. Until the EPA relinquishes jurisdiction, those Class V Injection Wells remain under federal oversight—meaning operators may face a two-agency permitting process that could delay new projects. By expressly empowering the Commission to petition the EPA to assume jurisdiction over Class V wells, SB 1186 aims to streamline approvals and create a single point of contact for all brine-mining activities.
Unlike Arkansas, it appears Texas does not intend to prescribe a uniform lithium royalty rate, leaving lease negotiations entirely to private parties. Drawing on lessons from Arkansas’s bromine industry—where brine is captured, processed, and reinjected—SWR 3.82 adopts similar operating concepts but appears to remain deliberately broad to accommodate the nascent state of the brine industry in Texas, lithium extraction technology, and economics.
Leasing Update
In 2023, Standard Lithium reported high concentrations of lithium in East Texas Smackover brine, drawing significant industry attention. This, combined with investment announcements from major players like Standard Lithium, Equinor, Chevron U.S.A., Inc., and GeoFrame, has accelerated interest in the region. As a result, we continue to see early movers securing leases across several East Texas counties with historical ties to Smackover formation activity. We also continue to see lease acquisitions in Southwest Arkansas, primarily in Miller, Lafayette, and Columbia Counties.
With Texas now having established a regulatory framework to permit and develop brine extraction projects, we expect operators to begin testing their lease positions. Going forward, we believe leasing momentum will be strongly influenced by two key factors: the release of additional well test data supporting commercial viability, and movements in commodity prices.
We are actively negotiating lease terms on behalf of clients and staying in close contact with peers across the industry to stay current on what constitutes “fair market” value. In our view, this opportunity is still in the early stages—what we’d consider the first quarter of the development cycle. With that in mind, our advice is to remain patient and deliberate. Early decisions should be guided by the most up-to-date information and grounded in a long-term view of the opportunity. We’re committed to helping you position strategically for success as the landscape continues to evolve. If you are a landowner in the region and have questions about these developments, we’d love to have a conversation.
