Quick answer
Class II wells inject fluids associated with oil and natural gas production, and those fluids are mostly brines, or salt water, brought to the surface while producing oil and gas.[1] Approved geologic formations receive the produced water that is reinjected through disposal wells, often formations that do not contain hydrocarbons.[2] Disposal wells make up about 20 percent of all Class II wells, and most oil and gas injection wells are in Texas, California, Oklahoma and Kansas.[1]
The Smackover Formation is known for rich deposits of oil and bromine, and its high-salinity brines have drawn recent attention for lithium.[14] In southern Arkansas, producers hold brine leases and integration orders covering the acreage from which they produce brine.[13] Water rights, the third interest, can turn on whether the water is groundwater or surface water: Oklahoma, for example, treats the two differently.[6]
Texas law recognizes that a landowner owns the groundwater below the surface of the land as real property.[4]
That Texas ownership entitles the landowner and the landowner's lessees, heirs or assigns to drill for and produce the groundwater, but not to capture a specific amount of it.[4]
Texas law calls groundwater conservation districts the state's preferred method of groundwater management, through rules each district adopts.[4]
In Texas, the ordinary flow of every flowing river, natural stream and lake, and the storm water and floodwater of every watershed, is the property of the state.[5]
In Oklahoma, groundwater is private property that belongs to the overlying surface owner, while stream water outside the Grand River Basin is publicly owned and subject to appropriation by the Oklahoma Water Resources Board.[6]
In New Mexico, water belongs to the public and is subject to appropriation for beneficial use, and under prior appropriation older, senior rights take priority over newer, junior rights in times of shortage.[8]
New Mexico has required permits for non-Tribal surface water appropriations since its 1907 Water Code and extended similar requirements to groundwater beginning in 1931.[8]
In June 2025, the Supreme Court of Texas held that a deed or lease using typical language to convey oil-and-gas rights includes produced water, even though it does not expressly address it, whether or not the parties knew of its value.[17] The court held that a reservation or exception of that produced water from the mineral conveyance must be express and cannot be implied.[17] In that Reeves County case, the court affirmed that the oil and gas lessee, not a later produced-water lessee of the surface owners, had the right to possess and dispose of the water in its production stream.[17]
On New Mexico state trust land, a commercial water well produces water for sale to persons other than the easement holder.[9] A commercial well easement pays an annual rent plus an additional rent for each barrel of water diverted from the well.[9]
Arkansas Code section 15-76-315 requires the producer in a brine unit to pay a brine fee to brine owners upon the production of brine, whether or not other substances are later extracted from it.[11] When the Arkansas Oil and Gas Commission finds that a new substance is profitably extracted from brine, the producer must also account separately, on a fair and equitable basis, to each owner in the unit.[11] Those payments are shared among the brine owners in a unit by each owner's proportional net acreage, which the Commission described as consistent with existing Arkansas methods for brine.[11] A brine unit order can also set the form of brine lease and the unit operating agreement to be used in the unit.[12]
In Michigan, Part 625 of the Natural Resources and Environmental Protection Act governs the location, drilling, operation and plugging of brine production wells, solution mining wells and certain disposal wells.[15] Michigan's solution mining wells inject water into underground salt formations, and the resulting brine is pumped to the surface and processed to obtain its minerals.[16] In Texas, the Railroad Commission regulates brine mining wells that dissolve salt formations and, under Statewide Rule 82 adopted in 2025, brine production wells used to extract elements, salts or other substances.[3]
On New Mexico state trust land, a saltwater disposal well needs an easement from the State Land Office, with some exceptions for wells inside oil and gas units.[9] The State Land Office charges a disposal rent for each barrel of produced water disposed of in the easement well, whether the water was produced on the lease or off it.[9] Its rule issues disposal site easements for five years or less with a preference right of renewal, paid at a negotiated rate that is subject to a minimum annual rental.[10] An easement application must estimate the number of barrels of salt water to be disposed and, where the land is under an oil and gas lease, include the lease record owner's written consent or the reasons for refusal.[10]
In Texas, Statewide Rule 9 governs the disposal of salt water into porous formations not productive of oil, gas or geothermal resources, including permit applications, notice and opportunity for hearing, monitoring, testing and plugging.[2] Michigan regulates brine disposal wells under its oil and gas program and, at the federal level, injection wells are also regulated by the Environmental Protection Agency under the Safe Drinking Water Act.[16]
Produced water comes with oil: on a national average, about 10 barrels of salt water are produced with every barrel of crude oil.[2]
The number of Class II wells varies from year to year with oil and gas demand and production.[1]
Seismicity can limit disposal: in the Northern Culberson-Reeves Seismic Response Area, the Railroad Commission suspended all permits for disposal of oil and gas waste into deep strata, effective January 12, 2024.[18]
In other Texas seismic response areas, disposal operators have committed to curtail injection volumes or stop injecting at some wells.[18]
On New Mexico trust land, the per-barrel disposal rent is set in tiers that depend on whether disposal is the operator's primary business.[9]
In an Arkansas brine unit, an owner's share of brine payments follows that owner's proportional net acreage in the unit.[11]
Oklahoma groundwater permits allocate a proportionate amount of water based on the basin's maximum annual yield and the share of overlying land the applicant owns or leases.[6]
Under New Mexico's prior appropriation system, a water right's seniority decides its priority when there is not enough water for every right.[8]
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. In Texas, water is not part of the mineral estate: unless expressly severed, subsurface water remains part of the surface estate, subject to the mineral estate's right to use water as reasonably necessary to produce the minerals.[17] Texas law extends a landowner's groundwater rights to the landowner's lessees, heirs or assigns.[4] A saltwater disposal easement on New Mexico trust land normally covers no more than two and a half acres around the injection site and runs for five years or less, with a preference right of renewal.[10] In southern Arkansas, producers hold brine leases and integration orders, while the underlying brine royalty owners are owed compensation when lithium is profitably extracted from the brine.[13]
Buckhead Energy buys water rights, brine leases and royalties, and saltwater disposal royalties. Water rights can change hands: Oklahoma's Water Resources Board provides petitions to transfer ownership of a groundwater permit or prior right and of a stream water permit or vested right.[7] In Arkansas, the Commission's compensation order for the Reynolds brine unit finds that the unit's brine owners and holders of brine leases are listed in the applicant's Exhibit B, which is attached to that order.[11]
Brine Minerals and Mineral Rights
Saltwater Disposal Wells and Mineral Owners
Smackover Formation Mineral Rights
Gas and Hydrogen Storage Leases
Geothermal Leases and Royalties
Educational information only — not legal, tax, or investment advice. Consult a qualified attorney, CPA, or landman about your specific situation.
A brine lease is one of the instruments under which producers hold the right to produce brine; in southern Arkansas, producers hold brine leases and integration orders covering the acreage they produce brine from.[13] An Arkansas brine unit order can set the form of brine lease used throughout that unit.[12]
The producer pays a brine fee to brine owners upon the production of brine, and accounts separately for any new substance the Commission finds is profitably extracted from the brine.[11] Payments are divided among brine owners by proportional net acreage in the unit.[11]
On New Mexico state trust land, the State Land Office, as landowner, charges a disposal rent for each barrel of produced water disposed of in an easement well.[9] Its disposal site easements are paid at a negotiated rate subject to a minimum annual rental.[10]
SWD is short for salt water disposal, the term New Mexico's State Land Office uses for its SWD well easements.[9] A disposal well returns salt water produced with oil and gas to the subsurface, usually into an approved formation that does not contain hydrocarbons.[2]
The Supreme Court of Texas held in 2025 that a typical oil-and-gas deed or lease includes the water produced with the hydrocarbons unless the surface owner expressly reserved it.[17]
On New Mexico state trust land, a commercial water well easement pays an annual rent and an additional rent for each barrel of water diverted from the well.[9]
Buckhead Energy buys water rights, brine leases and royalties, and saltwater disposal royalties. On New Mexico state trust land, disposal site easements run for five years or less with a preference right of renewal.[10]
Texas law recognizes that a landowner owns the groundwater below the surface of the land as real property.[4] The water of flowing rivers, natural streams and lakes is the property of the state.[5]
Buckhead Energy buys water rights, brine leases and royalties, and saltwater disposal royalties.
[1] Class II Oil and Gas Related Injection Wells — U.S. Environmental Protection Agency (accessed November 1, 2026)
[2] Oil and Gas Waste Disposal — Railroad Commission of Texas (accessed November 1, 2026)
[3] Brine Mining — Railroad Commission of Texas (accessed November 1, 2026)
[4] Texas Water Code, Chapter 36, Section 36.002 (Ownership of Groundwater) — Texas Legislature (accessed November 1, 2026)
[5] Texas Water Code, Chapter 11, Section 11.021 (State Water) — Texas Legislature (accessed November 1, 2026)
[6] Apply for a Water Permit — Oklahoma Water Resources Board (accessed November 1, 2026)
[7] Water Permitting Forms and Guidance — Oklahoma Water Resources Board (accessed November 1, 2026)
[8] State Tribal Collaboration Act Annual Report (Office of the State Engineer and Interstate Stream Commission) — New Mexico Office of the State Engineer (accessed November 1, 2026)
[9] Water Bureau — New Mexico State Land Office (accessed November 1, 2026)
[10] 19.2.11 NMAC, Salt Water Disposal Site Easements — New Mexico State Records Center and Archives (accessed November 1, 2026)
[11] Order No. 032-2025-05, Reynolds Brine Production Unit — Arkansas Oil and Gas Commission (accessed November 3, 2026)
[12] Order No. BU 026-2025-04, Creation of the Reynolds Brine Unit — Arkansas Oil and Gas Commission (accessed November 1, 2026)
[13] 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 1, 2026)
[14] USGS Uses Machine Learning to Show Large Lithium Potential in the Smackover Formation — U.S. Geological Survey (accessed November 1, 2026)
[15] Mineral Wells — Michigan Department of Environment, Great Lakes, and Energy (accessed November 1, 2026)
[16] Injection Wells in Michigan — Michigan Department of Environment, Great Lakes, and Energy (accessed November 1, 2026)
[17] Cactus Water Services, LLC v. COG Operating, LLC, No. 23-0676 (Tex. June 27, 2025) — Supreme Court of Texas (accessed November 1, 2026)
[18] Seismicity Response — Railroad Commission of Texas (accessed November 1, 2026)
Buckhead Energy buys water rights, brine leases and royalties, and saltwater disposal royalties.
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