Arkansas Royalty Payment Law: Deadlines, Interest and Owner Remedies

Arkansas royalty payment rules at a glance

First payment deadline

Proceeds from the sale of oil or gas must be paid to the people legally entitled to them starting no later than six months after the date of first sale, or as the small-balance rule in § 15-74-601(b)(2) provides (see minimum payments). First purchasers make the payment, unless an owner of the right to drill and produce is substituted for the first purchaser as payor. A separate section adds 12% interest when an operator under a lease fails to pay royalties within 180 days after production is marketed.

Payment of proceeds must begin no later than six months after the date of first sale. (Ark. Code Ann. § 15-74-601(a))

Statute text “shall be paid to persons legally entitled thereto, commencing no later than six (6) months after the date of first sale”

As amended in 2013, subsection (a) makes both deadlines subject to the small-balance rule in subdivision (b)(2). (Ark. Code Ann. § 15-74-601(a))

Statute text “commencing no later than six (6) months after the date of first sale and thereafter no later than sixty (60) days after the end of the calendar month within which subsequent production is sold or as provided for under subdivision (b)(2) of this section.”

As amended in 2013, the payment of proceeds under subsection (a) is to be made by the first purchasers of the production (Act 94 of 1987 also refers to an owner of the right to drill and produce substituted for the first purchaser; see the next fact). (Ark. Code Ann. § 15-74-601(b)(1))

Statute text “(b)(1) The payment of proceeds under subsection (a) of this section is to be made to persons entitled thereto by the first purchasers of the production.”

The statute contemplates that an owner of the right to drill and produce may be substituted for the first commercial purchaser as the payor. (Acts 1987, No. 94, § 2)

Statute text “If said first purchaser, or owner of the right to drill and produce substituted for the first commercial purchaser as provided herein, violates this Act by willfully withholding payments”

If an operator under a lease does not pay royalties within 180 days after the oil or gas is marketed, the unpaid royalties bear 12% interest from then until paid. (Ark. Code Ann. § 15-74-604(b))

Statute text “In the event the operator under an oil or gas lease fails to pay oil or gas royalties to the mineral owner or his assignee within one hundred eighty (180) days after oil or gas produced under the lease is marketed, the unpaid royalties shall bear interest thereafter at the rate of twelve percent”

Later payments

After the first payment, proceeds are due no later than 60 days after the end of the calendar month in which later production is sold, or as the small-balance rule in § 15-74-601(b)(2) provides. For royalty gas from a Commission-integrated drilling unit, the operator distributes royalty money by the 30th day of the month after the operator receives it.

Later payments are due no later than 60 days after the end of the calendar month in which subsequent production is sold. (Ark. Code Ann. § 15-74-601(a))

Statute text “thereafter no later than sixty (60) days after the end of the calendar month within which subsequent production is sold”

In an integrated drilling unit, the operator must distribute royalty moneys by check or electronic transfer by the 30th day of the next calendar month after receiving them. (Ark. Code Ann. § 15-72-305(a)(5)(A))

Statute text “(5)(A) On or before the thirtieth day of the next calendar month following its receipt of the royalty moneys as provided above, the operator shall distribute the moneys by check or by any form of electronic funds transfer to all royalty owners as provided in this subsection.”

Minimum payment and aggregation

Arkansas has three annual-payment thresholds, each for a different payor. (1) First purchasers paying proceeds under § 15-74-601(b): payment may be made annually when 12 months of accumulated proceeds total at least $10 but less than $150; on the royalty owner's written request, payment must be made once the total exceeds $50; amounts under $10 may be held until production ceases or the payor gives up responsibility (Act 1062 of 2013). (2) Operators distributing royalty money in a Commission-integrated drilling unit under § 15-72-305(a)(5)(A): the same $10 / $150 / $50 rule (Act 1062 of 2013). (3) An operator under an oil or gas lease paying royalties under § 15-74-604(b): may remit annually when 12 months of royalties total $100 or less (Act 1175 of 2009).

Section 15-74-601 payments are made by the first purchasers of the production. (Ark. Code Ann. § 15-74-601(b)(1))

Statute text “(b)(1) The payment of proceeds under subsection (a) of this section is to be made to persons entitled thereto by the first purchasers of the production.”

First purchasers may pay annually where the aggregate owed is at least $10 but less than $150. The Act strikes the earlier '$100 or less' and inserts $150; both phrases appear in the plain text, and the strike-through was confirmed on the page image. (Ark. Code Ann. § 15-74-601(b)(2))

Statute text “(2) The payment may be made annually for the aggregate of up to twelve (12) months of accumulation of proceeds if the aggregate amount owed is at least ten dollars ($10.00), but less than one hundred dollars ($100) or less one hundred fifty dollars ($150)”

On the royalty owner's written request, payment must be made once the aggregate exceeds $50; amounts under $10 may be held but must be paid when production ceases or the payor relinquishes responsibility. (Ark. Code Ann. § 15-74-601(b)(2))

Statute text “provided, upon written request by the royalty owner, the payment shall be made when the aggregate amount exceeds fifty dollars ($50.00). Accumulated amounts of less than ten dollars ($10.00) may be held but shall be paid when production ceases or by the payor of the payment upon relinquishing responsibility.”

For royalty money an operator distributes in an integrated drilling unit, annual distribution is allowed where the aggregate due is at least $10 but less than $150 (the Act strikes '$100 or less' and inserts $150). (Ark. Code Ann. § 15-72-305(a)(5)(A))

Statute text “distribution may be made annually for the aggregate of up to twelve (12) months of accumulated royalty moneys where the aggregate amount due any royalty owner is at least ten dollars ($10.00), but less than one hundred dollars ($100) or less one hundred and fifty dollars ($150).”

Section 15-74-604(b) governs an operator under an oil or gas lease that pays royalties to the mineral owner. (Ark. Code Ann. § 15-74-604(b))

Statute text “In the event the operator under an oil or gas lease fails to pay oil or gas royalties to the mineral owner or his assignee”

That operator may remit annually where the aggregate owed is $100 or less. The Act strikes $25.00 and inserts $100; the strike-through was confirmed on the page image. (Ark. Code Ann. § 15-74-604(b))

Statute text “Provided, that the operator may remit annually to a person entitled to royalties the aggregate of up to twelve (12) months of monthly royalties where the aggregate amount owed is twenty-five dollars ($25.00) one hundred dollars ($100) or less.”

Interest on late payments

When payment is not made on time, the first purchaser owes interest at 12% a year from the payment due date, unless a written agreement between payor and payee sets a different rate. A lessee operator that misses the 180-day royalty deadline in § 15-74-604(b) owes 12% a year until paid. Willful withholding without just cause or in bad faith can add a penalty of up to 14% simple interest (see owner remedies).

Interest runs from the payment due date at 12% per annum on unpaid amounts, unless a different rate is set in a written agreement between payor and payee. (Ark. Code Ann. § 15-74-601(e))

Statute text “shall pay interest to those legally entitled to the withheld proceeds commencing on the payment due date at the rate of twelve percent (12%) per annum on the nonpaid amounts unless a different rate of interest is specified in a written agreement between the payor and the payee.”

If an operator under a lease fails to pay royalties within 180 days after the oil or gas is marketed, the unpaid royalties bear interest at 12% per annum from then until paid. (Ark. Code Ann. § 15-74-604(b))

Statute text “In the event the operator under an oil or gas lease fails to pay oil or gas royalties to the mineral owner or his assignee within one hundred eighty (180) days after oil or gas produced under the lease is marketed, the unpaid royalties shall bear interest thereafter at the rate of twelve percent … (12%) per annum until paid.”

Suspense and withheld payments

Section 15-74-604(b) states that 'this subchapter' does not apply when owners take their share in kind, or when unmarketable title would substantially affect the making of royalty payments. A holder of mineral proceeds must open an escrow account for an owner who is unknown or has not been located within one year after the funds became payable. That owner must be paid promptly upon proving identity and marketable title.

Section 15-74-604(b) states that 'this subchapter' does not apply when mineral owners elect to take their share of production in kind, or when unmarketable title would substantially affect the making of royalty payments. (Ark. Code Ann. § 15-74-604(b))

Statute text “This subchapter shall not apply when mineral owners or their assignees elect to take their proportionate share of production in kind or in the event of unmarketability of title which would affect substantially the making of the royalty payments.”

A holder must set up an escrow account for mineral proceeds when the person entitled is unknown or has not been located within one year after the funds became payable or distributable. (Ark. Code Ann. § 18-28-402(a)(1))

Statute text “(a)(1) A holder of mineral proceeds shall establish an escrow account for mineral proceeds if the person entitled to the receipt of the mineral proceeds is unknown or has not been located within one (1) year after the funds became payable or distributable.”

A person who shows sufficient proof of identity and ownership of marketable title must be promptly paid the escrowed sum. (Ark. Code Ann. § 18-28-402(a)(3))

Statute text “sufficient proof of identity and ownership of marketable title to the property shall be promptly paid the sum accumulated for his or her benefit in the escrow account.”

Division orders

Gas division orders and declarations of interest with Arkansas royalty owners must show specific information on the first page: owner name and address, spaces for tax ID and signature, the owner's acreage and decimal interest, total net mineral acres, and the effective date. This requirement does not apply to wells producing liquid hydrocarbons. We found no Arkansas provision (in the texts we could read) on whether a division order may change the lease.

Every gas division order or declaration of interest with royalty interest owners in Arkansas must contain listed information on its first page. (Ark. Code Ann. § 15-74-101 (Acts 1987, No. 605, § 1))

Statute text “From and after the effective date of this Act, all division orders or any declaration of interest in gas between the purchaser of gas production and the owner(s) of the production in Arkansas or between the purchasers of gas production or the owner(s) of the production and the royalty interest owners in Arkansas shall contain the following information on the first page:”

Required items: the owner's name and address; a space for Social Security or tax ID number and signature; the owner's acreage and fractional or decimal interest in the pool; total net mineral acres covered; and the order's effective date. (Ark. Code Ann. § 15-74-101 (Acts 1987, No. 605, § 1))

Statute text “(a) the name and address of the owner of royalties; (b) a space for the owner's Social Security number or tax identification number and such other information needed to meet the requirements of the Internal Revenue Service or other governmental agencies and a space for the owner's signature; (c) the acreage under which the royalty owner has an interest and the fractional or decimal interest owned by the royalty owner in the pool; (d) the total amount of the net mineral acres in the area subject to the division order; (e) the effective date of the division order.”

The requirement does not apply to units or wells producing only liquid hydrocarbons, or liquids associated with gas, or gas associated with liquids. (Acts 1987, No. 605, § 2)

Statute text “The terms of this Act shall not be applicable to any producing unit or well that produces liquid hydrocarbons only, or liquid hydrocarbons associated with the production of gas or gas produced associated with the production of liquid hydrocarbons.”

Owner remedies, notice and attorney fees

Before suing for a purchaser's failure to make timely payment of proceeds, or interest on them, under the payment and interest provisions Act 94 of 1987 amended, an owner must give the first purchaser, or the owner of the right to produce, written notice; the payor then has 30 days to pay or to give a reasonable basis in writing. The enacting text (Act 94 of 1987) contains two attorney-fee rules: for willful withholding without just cause or in bad faith, the court may add a penalty of up to 14% simple interest plus 'a reasonable attorney's fee'; and for willful nonpayment or a defense with no justiciable issue, the court 'shall award' the prevailing party a fee of up to $5,000 or 10% of the amount in controversy, whichever is less, unless a voluntary dismissal is filed or the pleadings are amended as to the nonjusticiable issue within a reasonable time after the party or attorney knew, or reasonably should have known, that he would not prevail. Act 94 states that its terms do not apply to a unit or well producing liquid hydrocarbons, or liquids associated with gas, or gas associated with liquids. For royalty gas from a Commission-integrated unit, Act 94 of 1987 also requires a certified-mail answer to an owner's information request within 45 days, enforceable by a complaint to the Oil and Gas Commission. Since 2021 each interest owner also holds a statutory lien on the oil and gas and its proceeds securing the first purchaser's payment. Since 2025, unauthorized royalty deductions in a gas drilling unit must be reimbursed within 30 days.

When owners seek relief for a purchaser's failure to make timely payment of proceeds, or interest on them, as required by subsection 1(A) or (B) of the payment act that Act 94 amends, written notice of the failure is a prerequisite to suing; the payor then has 30 days to pay or respond in writing with a reasonable basis. (Acts 1987, No. 94, § 3)

Statute text “If persons legally entitled to the proceeds seek relief for the failure of the purchaser to make timely payment of proceeds from the sale of oil or gas or interest thereon as required in subsection 1(A) or (B) of this section, the first purchaser or the owner of the right to produce under an oil or gas lease or force pooling order shall be furnished with written notice of such failure as a prerequisite to commencing judicial action for such nonpayment. The first purchaser shall have thirty (30) days after receipt of the required notice within which to pay procceds or to respond in writing with a reasonable basis for nonpayment.”

For willful withholding without just cause or in bad faith, the court may award, besides the unpaid proceeds and interest, a penalty of up to 14% simple interest a year on the unpaid proceeds from the due date, and a reasonable attorney's fee. (Acts 1987, No. 94, § 2)

Statute text “If said first purchaser, or owner of the right to drill and produce substituted for the first commercial purchaser as provided herein, violates this Act by willfully withholding payments without just cause or through bad faith from persons legally entitled to the proceeds from production, the court may award, in addition to the unpaid amount of such proceeds and interest as provided in subsection (A) of this section, a penalty in an amount not to exceed simple interest at a rate of fourteen percent (14%) per annum on the amount of the unpaid proceeds from the due date as provided in subsection (A) of this section and a reasonable attorney's fee.”

In the event of willful nonpayment, or where the court finds a complete absence of a justiciable issue raised by the losing party, the court shall award the prevailing party an attorney's fee not to exceed $5,000 or 10% of the amount in controversy, whichever is less, unless a voluntary dismissal is filed or the pleadings are amended as to the nonjusticiable issue within a reasonable time after the party or attorney knew, or reasonably should have known, that he would not prevail. (Acts 1987, No. 94, § 3)

Statute text “In the event of the willfull nonpayment or in the event the court finds there was a complete absence of a justiciable issue of either law or fact raised by the losing party or his attorney, the court shall award an attorney's fee in the amount not to exceed five thousand dollars ($5,000.00) or ten percent (10%) of the amount in controversy, whichever is less, to the prevailing party unless a voluntary dismissal is filed, or the pleadings are amended, as to any such nonjusticiable issue within a reasonable time after the attorney or party filing the dismissal or the amended pleadings knew, or reasonably should have known, that he would not prevail.”

Since 2025, in a drilling unit, deductions or expenses taken from a leased owner's royalty that the lease does not allow must be reimbursed within 30 days of the deduction (gas units; not liquids wells). (Ark. Code Ann. § 15-72-325(d)(2) (Acts 2025, No. 1024))

Statute text “then the deductions or expenses not specifically allowed by the applicable lease shall be reimbursed to the royalty owner within thirty (30) days of the deduction being taken from the royalty payment of the royalty owner.”

Since 2021, each interest owner holds a statutory oil and gas lien securing the first purchaser's obligation to pay the sales price; the lien continues in the oil and gas after severance and in the proceeds. (Ark. Code Ann. § 15-72-1103(a)-(b) (Acts 2021, No. 275))

Statute text “(a) To secure the obligations of a first purchaser to pay the sales price, each interest owner is granted an oil and gas lien to the extent of the interest owner’s interest in an oil and gas right that exists as part of and incident to the ownership of an oil and gas right. (b) An oil and gas lien: (1) Exists in and attaches immediately to all oil and gas as of the effective date of this subchapter; (2) Continues uninterrupted and without lapse in all oil and gas upon and after severance; and (3) Continues uninterrupted and without lapse in and to all proceeds.”

Act 94 of 1987 states that its terms do not apply to a unit or well producing liquid hydrocarbons only, or liquids associated with gas, or gas associated with liquids. (Acts 1987, No. 94, § 4)

Statute text “SECTION 4. Limitations. The terms of this Act shall not be applicable to any producing unit or well that produces liquid hydrocarbons only, or liquid hydrocarbons associated with the production of gas or gas produced associated with the production of liquid hydrocarbons.”

As enacted in 1987, for royalty gas distributed by the operator of a Commission-integrated drilling unit, a royalty owner's certified-mail request for information about a payment must be answered by certified mail within 45 days; if it is not, the owner may file a complaint with the Oil and Gas Commission, which may impose sanctions including a civil penalty of up to $500. (Acts 1987, No. 94, § 1)

Statute text “If a royalty interest owner requests information or answers to questions concerning a payment made pursuant to this subsection and the request is made by certified mail with return receipt requested, the party making payment must respond to the request by certified mail with return receipt requested not later than forty-five (45) days after the request is received. If a royalty interest owner fails to receive an answer to his/her request for information or to his/her questions, the royalty interest owner may file a complaint with the Arkansas Oil and Gas Commission … Such sanctions shall include, but not be limited to, a civil penalty of up to, but not more than, five hundred dollars ($500.00).”

Check-stub disclosures

For royalty gas distributed by the operator of a Commission-integrated drilling unit, each distribution must show the payee, the wells, the period covered, decimal interest, total production, gross price, itemized deductions, and an address and phone number for questions. The list is quoted from the 1987 enacting Act. Later Acts (2009, 2013) reworded the lead-in, and the 2013 version allows paper or electronic delivery.

As amended in 2013, the operator must provide the listed information for each distribution, on paper or in accessible electronic form. (Ark. Code Ann. § 15-72-305(a)(5)(A))

Statute text “With respect to each such distribution the operator shall provide the following to the royalty owner in paper form or make accessible in electronic form:”

Items as enacted in 1987: the payee's name; well identification by well number or division order; the period covered; the payee's decimal interest; and total production from each well. (Acts 1987, No. 94, § 1)

Statute text “(i) the name of the party entitled to payment; (ii) identification of the well(s) for which payment is being made by well number or division order; (iii) the time period for which payment is made; (iv) the decimal interest of the party being paid; (v) the total production from each well for which payment is being made;”

Further items: gross price per unit of production; itemized deductions; and an address and phone number for questions. (Acts 1987, No. 94, § 1)

Statute text “(vi) the gross price received for each unit of production from each well; (vii) any and all deductions from the payment which shall be itemized as to the nature thereof; (viii) an address and telephone number at which additional information may be obtained and questions be answered.”

As enacted in 1987, an operator that stops royalty payments for more than 60 days must send a letter of explanation. (Acts 1987, No. 94, § 1)

Statute text “In the event that the operator stops the royalty payments for a period of more than sixty (60) days for any reason, the operator shall send a letter of explanation.”

Unclaimed royalties (escheat)

Mineral proceeds held or owed by a holder are presumed abandoned if unclaimed for more than three years after they became payable or distributable. They then go to the Auditor of State's Abandoned Mineral Proceeds Trust Fund, subject to the general unclaimed property act, except that, on the county attorney's petition, proceeds held under leases executed by court-appointed receivers or their successors are remitted to the county where the minerals were produced, for its general fund.

Mineral proceeds unclaimed for longer than three years after becoming payable or distributable are presumed abandoned. The 2015 Act strikes 'five (5)' and inserts 'three (3)'; confirmed on the page image. (Ark. Code Ann. § 18-28-403(a)(1)(A))

Statute text “All mineral proceeds that are held or owing by the holder and that have remained unclaimed by the owner for longer than five (5) three (3) years after the mineral proceeds became payable or distributable are presumed abandoned.”

Abandoned mineral proceeds are subject to the unclaimed property act and are deposited in the Abandoned Mineral Proceeds Trust Fund. (Ark. Code Ann. § 18-28-403(a)(1)(B))

Statute text “Abandoned mineral proceeds are subject to the unclaimed property provisions of § 18-28-201 et seq., except that funds received by the Auditor of State … shall be deposited by the Auditor of State into a special trust fund to be known as the Abandoned Mineral Proceeds Trust Fund.”

The Auditor of State requires mineral proceeds to be reported pay-to-current, with well name, county, section, township and range. (Arkansas Auditor of State, holder FAQ (citing A.C.A. § 18-28-201(9)))

Statute text “Arkansas requires that mineral proceeds be reported on a pay-to-current basis. Mineral proceeds are amounts payable for the extraction, production, or sale of minerals, or upon the abandonment of those payments, all payments that become payable thereafter. The holder must provide the well name, county, section, township, and range of the well with the report of unclaimed property.”

On petition of the county attorney, abandoned mineral proceeds held under leases executed by court-appointed receivers or their successors are remitted by the holder to the county where the minerals were produced or severed and deposited into the county general fund. (Ark. Code Ann. § 18-28-403(a)(2)(A))

Statute text “However, upon petition of the county attorney of the county … abandoned mineral proceeds that are held pursuant to leases executed by receivers or their successors appointed by a court of proper jurisdiction, shall be remitted by the holder to the county … and deposited into the county general fund.”

Official unclaimed property search: Arkansas Auditor of State - Unclaimed Property.

Scope notes

• The compiled Arkansas Code is published only on LexisNexis's free-access site, which requires accepting its terms; this review did not use it. Statute text comes from the enacting and amending Acts on arkleg.state.ar.us and from official Arkansas appellate opinions quoting the statute, so codified wording may differ slightly.
• Arkansas has separate annual-payment thresholds for different payors: first purchasers under § 15-74-601(b) and operators distributing in an integrated drilling unit under § 15-72-305 ($10 to under $150), and operators under a lease paying royalties under § 15-74-604(b) ($100 or less). The 2013 Act that set the first did not amend § 15-74-604.
• The notice, penalty and attorney-fee rules quoted from Act 94 of 1987 are cited to the Act; this review did not confirm their codified section numbers or text.
• This page covers only the Arkansas provisions whose text was read in the Acts and opinions listed below. Other Code sections, for example Ark. Code Ann. § 15-74-604(d) on suspense during litigation and § 15-74-707 on purchaser payments and monthly statements, were not reviewed because their current text is not in those sources.

Sources

Last reviewed November 2, 2026.

• Stroud Production, LLC v. J-Lu Ltd. Co., 2024 Ark. App. 236 (opinion delivered Apr. 10, 2024) - quotes Ark. Code Ann. § 15-74-601(a) and (e) verbatim — Arkansas Judiciary (official opinions site), fetched November 2, 2026
• Act 1062 of 2013 (HB2198) - amends Ark. Code §§ 15-74-601(a),(b), adds (g); 15-72-305(a)(5)(A). Session-law PDF; text = pdftotext -layout with margin line numbers stripped. Struck words appear in plain text and were checked against the page image. — Arkansas State Legislature (Bureau of Legislative Research), fetched November 2, 2026
• Act 1175 of 2009 (HB1580) - § 17 amends Ark. Code § 15-74-604(b); § 18 amends § 18-28-402(d). Session-law PDF; margin line numbers stripped; struck words checked against page image. — Arkansas State Legislature (Bureau of Legislative Research), fetched November 2, 2026
• Act 94 of 1987 (SB210) - source of current Ark. Code §§ 15-74-602 and 15-74-603 (no later amending Act found) and of the payment-statement list now in § 15-72-305(a)(5) — Arkansas State Legislature (Bureau of Legislative Research), fetched November 2, 2026
• Act 605 of 1987 (HB1325) - source of Ark. Code § 15-74-101 (information required in gas division orders); no later amending Act found — Arkansas State Legislature (Bureau of Legislative Research), fetched November 2, 2026
• Act 1024 of 2025 (HB1656) - adds Ark. Code § 15-72-325 (obligations of operators and working interest owners to mineral owners). Margin line numbers stripped. — Arkansas State Legislature (Bureau of Legislative Research), fetched November 2, 2026
• Act 1039 of 2015 (HB1782) - amends Ark. Code §§ 18-28-202, 18-28-402, 18-28-403 (abandoned mineral proceeds: five years struck, three inserted; verified on page image). Margin line numbers stripped. — Arkansas State Legislature (Bureau of Legislative Research), fetched November 2, 2026
• Arkansas Auditor of State - Unclaimed Property holder FAQ — Arkansas Auditor of State, fetched November 2, 2026
• Act 275 of 2021 (HB1273) - Oil and Gas Owners' Lien Act of 2021, adds Ark. Code §§ 15-72-1101 et seq. Margin line numbers stripped. No later amending measure found in an arkleg full-text search of sessions 2021S1-2026S1. — Arkansas State Legislature (Bureau of Legislative Research), fetched November 2, 2026

Related guides

• Royalty payment law by state (comparison of the covered states)
• Arkansas mineral rights
• Suspended royalties: why you are not getting paid
• Division orders explained
• How to read a royalty statement
• Unclaimed mineral royalties

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