Media reports indicate there is growing concern about a new law in Arkansas created to protect royalty owners in the Fayetteville Shale. One oil and gas group is talking of a possible constitutional challenge.
The Arkansas Democrat-Gazette reports the new law that will take effect in August is opposed by the Arkansas Independent Producers and Royalty Owners (AIPRO) which contends new drillilng will be deterred by the law and possibly cause the shut down of existing wells. AIRPRO is talking of a possible challenge in the courts and contends the new law does not represent a compromise.
The law, known as Act 1024, is intended to protect royalty owners in the Fayetteville Shale by giving them the ability to negotiate for royalties more than the 12.5% minimum. The Act, according to Arkansas Business, was born out of attempts to restore some of the original royalty payments which were much higher prior to 2019 when some were cut by 30-50%.
But critics of the new law also maintain it improperly changes some of the longstanding contracts.