Quick answer
The Smackover Formation is a porous, permeable limestone that extends under parts of Arkansas, Louisiana, Texas, Alabama, Mississippi and Florida, and it is known for rich deposits of oil and bromine.[7] Its high-salinity brines have drawn recent attention for the lithium dissolved in them.[7] The Arkansas Oil and Gas Commission has found that neither brine nor lithium ions, at their low concentrations, have value at the wellhead, and that the value comes from the lithium products made from them.[1]
As the Commission's 2024 order quotes it, Arkansas Code section 15-76-315 requires the producers of a unit to account separately and on a fair and equitable basis to each owner in the unit for substances the Commission finds are profitably extracted from brine and that were not extracted on January 1, 1979.[5] In a 2024 order, the Commission upheld its hearing officer's finding that the brine leases and integration orders covering certain objecting owners' brine interests include all chemical substances extracted from brine, including lithium.[5]
In December 2024, the Commission denied a joint application by several brine producers that proposed one lithium royalty methodology across Columbia, Lafayette, Miller and Union counties.[5] In that proceeding, the hearing officer found that the Brine Act requires a royalty rate on additional substances to be set on a brine unit basis, after a threshold finding that the substance can be profitably extracted.[5] In June 2025, the Commission found that the operator of the Reynolds Brine Production Unit in Columbia and Lafayette counties had proved it can profitably extract lithium, and ordered a compensation formula for the unit's brine owners.[1]
The formula is product quantity times price times compensation rate times the brine owner's interest.[1]
Product quantity is the first marketable lithium product produced, converted to lithium carbonate equivalent.[1]
Price is a technical-grade lithium carbonate index for North American markets, determined quarterly from the average of the index's daily spot prices.[1]
The compensation rate is 2.50%, which the Commission described as the ongoing rate for the unit.[1]
Each brine owner's interest is that owner's proportional net acreage in the brine unit.[1]
The lithium compensation is owed in addition to the brine fee that brine owners receive on the production of brine.[1]
In July 2025, the Commission applied the same 2.50% rate to lithium from the Pine Brine Production Unit in Miller and Lafayette counties.[2] In March 2026, it applied a 2.50% rate to the Evergreen Brine Production and Evergreen Expansion Brine Unit in Columbia and Lafayette counties.[3]
Brine units are created by Commission order, and the Reynolds Brine Unit covers about 20,854 acres in Lafayette and Columbia counties.[4] The applicant for the Reynolds unit and its partners showed that they owned at least 75% of the right to drill in the proposed unit.[4] The Reynolds order tied the unit's form of brine lease and operating agreement to whether the Commission approved model forms, including a model brine lease, by July 21, 2025.[4] The Commission's lithium orders include brine unit orders that also integrate unleased mineral interests, such as the order establishing the Pine Brine Unit.[6]
In 2023, the Texas Legislature gave the Railroad Commission authority to regulate brine production wells used to extract elements, salts or other useful substances other than oil or gas, and the Commission adopted Statewide Rule 82 in 2025.[8] An operator needs a brine production project permit and Class V permits for the wells that return spent brine to the same geologic zone, with lithium and bromine named as examples of the resources involved.[9] Rule 82's standard is 1,280 contiguous acres per brine production well, with wells at least half a mile from project boundaries and non-participating tracts, and an operator may request an exception, which may require notice and a hearing.[9]
The Railroad Commission does not decide ownership: a good faith claim to produce the brine resources is required for each tract included in a brine production project.[10] When it adopted the rule, the Commission declined to answer industry questions about ownership and leasing.[10] Separately, the Supreme Court of Texas held in 2025 that a deed or lease using typical language to convey oil-and-gas rights includes the produced water that comes up with the hydrocarbons unless the surface owner expressly reserved it.[14] The court expressed no view on ownership of any nonhydrocarbon minerals in that liquid-waste byproduct, because none were in dispute.[14]
Louisiana's Act 126 of 2024 provides that, unless a contract expressly provides otherwise, brine produced incident to oil and gas production belongs to the person who has the right to drill into and produce from the pool.[13] The act defines brine as subterranean salt water and its constituent parts, and names lithium carbonate and lithium hydroxide among the products that can be made from brine.[11] It adds brine to pooling and unitization orders and to the substances the Louisiana Mineral Code applies to, and it requires approval by three quarters of the ownership of a particular interest for a unit operation order.[11] In Louisiana, an instrument relating to a mortgage or privilege over immovable property, or a pledge of the lessor's rights in a lease of an immovable and its rents, is recorded in the mortgage records of the parish where the property is located, and all other instruments are recorded in that parish's conveyance records.[12]
A unit's lithium rate follows a Commission finding that lithium can be profitably extracted from that unit's brine, as the Reynolds order found.[1]
The Reynolds operator based its profitability showing on demonstration plant data, exploratory wells, seismic and well log data, cost projections and assumptions about global lithium prices.[1]
Because the price term is a lithium carbonate market index averaged each quarter, the compensation moves with that index.[1]
An owner's share depends on that owner's proportional net acreage in the brine unit.[1]
A U.S. Geological Survey-led study estimated between 5 and 19 million tons of lithium in brines beneath southwestern Arkansas.[7]
The study's lead researcher cautioned that the estimate is an in-place assessment, not an estimate of what is technically recoverable.[7]
What Buckhead buys depends on the deal, and Buckhead tells the seller up front which interest it is offering to buy — for example, the payments for the rest of the current lease term, a term easement, or a longer-term interest. Louisiana's Mineral Code names three basic mineral rights a landowner can create: the mineral servitude, the mineral royalty and the mineral lease.[15] A mineral royalty is the right to share in production from land owned by another, and unless the parties qualify it, it is free of drilling and production costs.[16] A Louisiana mineral royalty can be granted for a set time and ends when that time expires, and it is also extinguished by ten years of nonuse.[17] Arkansas lithium orders distinguish the producers that hold brine leases and integration orders from the underlying brine royalty owners who are compensated for the lithium.[5]
Buckhead Energy buys lithium brine royalties. The Reynolds lithium order identifies the brine owners and brine lease holders in the unit in an exhibit attached to the order.[1] The Commission publishes its lithium-from-brine orders by unit, operator, docket and county on its lithium page.[6]
Brine Minerals and Mineral Rights
Smackover Formation Mineral Rights
Smackover Formation in Mississippi
Water, Brine and Saltwater Disposal Royalties
Geothermal Leases and Royalties
Educational information only — not legal, tax, or investment advice. Consult a qualified attorney, CPA, or landman about your specific situation.
The Arkansas Oil and Gas Commission set a 2.50% compensation rate for lithium from the Reynolds Brine Production Unit in June 2025.[1] It applied the same rate to the Pine Brine Production Unit in July 2025.[2] It applied a 2.50% rate to the Evergreen units in March 2026.[3]
The Commission sets it unit by unit after finding that lithium can be profitably extracted, using the formula product quantity times price times compensation rate times the brine owner's interest.[1] Quantity is measured in lithium carbonate equivalent, price comes from a quarterly average of a lithium carbonate market index, and each owner's interest is its proportional net acreage in the unit.[1]
Yes: the Reynolds order requires the operator to pay the brine fee to brine owners on brine production and, in addition, to account separately for the lithium it profitably extracts.[1]
In Arkansas, the Commission upheld a finding that the brine leases and integration orders covering certain owners' brine interests include all chemical substances extracted from brine, including lithium.[5] In Louisiana, unless a contract expressly provides otherwise, brine produced incident to oil and gas production belongs to the person who has the right to drill into and produce from the pool.[13] In Texas, the Railroad Commission does not decide ownership and requires a good faith claim to produce the brine for each tract.[10]
Louisiana's Act 126 of 2024 defines brine to exclude salt water produced in oil or gas production that is not saved or sold for extraction of minerals.[11] Unless a contract expressly provides otherwise, Louisiana gives ownership of brine produced incident to oil and gas production to the person who has the right to drill into and produce from the pool.[13] In Texas, the Supreme Court held in 2025 that a typical oil-and-gas conveyance includes the produced water unless the surface owner expressly reserved it, but it expressed no view on ownership of nonhydrocarbon minerals in that liquid-waste byproduct.[14] The Texas Railroad Commission does not decide ownership of brine resources and requires a good faith claim to produce them for each tract in a project.[10]
A U.S. Geological Survey-led study estimated between 5 and 19 million tons of lithium in Smackover brines beneath southwestern Arkansas.[7] That is an in-place estimate, not an estimate of what is technically recoverable.[7]
Buckhead Energy buys lithium brine royalties.
[1] Order No. 032-2025-05, Reynolds Brine Production Unit (lithium compensation) — Arkansas Oil and Gas Commission (accessed November 1, 2026)
[2] Order No. 035-2025-06, Pine Brine Production Unit (lithium compensation) — Arkansas Oil and Gas Commission (accessed November 1, 2026)
[3] Order No. 001-2026-01, Evergreen Brine Production and Evergreen Expansion Brine Unit (lithium compensation) — Arkansas Oil and Gas Commission (accessed November 1, 2026)
[4] Order No. BU 026-2025-04, Creation of the Reynolds Brine Unit — Arkansas Oil and Gas Commission (accessed November 1, 2026)
[5] Order No. 050-2024-09, Establishment of Fair and Equitable Consideration for Profitable Extraction of Lithium from Brine — Arkansas Oil and Gas Commission (accessed November 3, 2026)
[6] Lithium from Brine — Arkansas Oil and Gas Commission (accessed November 1, 2026)
[7] USGS Uses Machine Learning to Show Large Lithium Potential in the Smackover Formation — U.S. Geological Survey (accessed November 1, 2026)
[8] Brine Mining — Railroad Commission of Texas (accessed November 1, 2026)
[9] Brine Production Permit Procedures — Railroad Commission of Texas (accessed November 3, 2026)
[10] Adoption of new 16 TAC 3.82, relating to Brine Production Projects — Railroad Commission of Texas (accessed November 1, 2026)
[11] Resume Digest, Act 126 (SB 285), 2024 Regular Session — Louisiana State Legislature (accessed November 1, 2026)
[12] Louisiana Civil Code Article 3346, Place of recordation — Louisiana State Legislature (accessed November 3, 2026)
[13] La. R.S. 30:2.1, Ownership of brine produced incident to oil and gas operations — Louisiana State Legislature (accessed November 3, 2026)
[14] Cactus Water Services, LLC v. COG Operating, LLC, No. 23-0676 (Tex. June 27, 2025) — Supreme Court of Texas (accessed November 3, 2026)
[15] Louisiana Revised Statutes 31:16, Basic mineral rights — Louisiana State Legislature (accessed November 1, 2026)
[16] Louisiana Revised Statutes 31:80, Nature of mineral royalty — Louisiana State Legislature (accessed November 1, 2026)
[17] Louisiana Revised Statutes 31:85, Extinction of mineral royalties — Louisiana State Legislature (accessed November 1, 2026)
Buckhead Energy buys lithium brine royalties.
Get a Free Written Offer