Stricken language would be deleted from and underlined language would be added to present law.
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State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1937 3
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By: Representative Jean 5
By: Senators Stone, Caldwell 6
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For An Act To Be Entitled 8
AN ACT TO AMEND THE METHOD OF VALUATION FOR MINERAL 9
RIGHTS UNDER ARKANSAS CONSTITUTION, ARTICLE 16, § 5; 10
TO CLARIFY THE METHOD OF VALUATION FOR OIL AND GAS 11
WELL PRODUCTION EQUIPMENT; TO PROVIDE FOR CONSISTENCY 12
AND UNIFORMITY IN VALUATION; AND FOR OTHER PURPOSES. 13
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Subtitle 16
TO AMEND THE METHOD OF VALUATION FOR 17
MINERAL RIGHTS UNDER ARKANSAS 18
CONSTITUTION, ARTICLE 16, § 5; AND TO 19
CLARIFY THE METHOD OF VALUATION FOR OIL 20
AND GAS WELL PRODUCTION EQUIPMENT. 21
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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 23
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SECTION 1. DO NOT CODIFY. Legislative intent. 25
The General Assembly intends for this act to: 26
(1) Be remedial; 27
(2) Clarify the law; and 28
(3) Apply retroactively to the effective date of Acts 2021, No. 29
668. 30
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SECTION 2. Arkansas Code § 26-26-1110(a), concerning the valuation of 32
mineral rights for purposes of property taxes, is amended to read as follows: 33
(a)(1) As used in this section: 34
(A) “Oil well Well” means a producing unit well or well 35
that produces: 36 HB1937
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(i) Only liquid hydrocarbons; 1
(ii) Liquid hydrocarbons associated with the 2
production of gas; or 3
(iii) Gas associated with the production of liquid 4
hydrocarbons; 5
(iv) Natural gas; or 6
(v) Any combination of oil, gas, and other 7
hydrocarbons; and 8
(B) “Production equipment” means all piping and other 9
equipment of an oil a well from the bottom of the casing to and including the 10
sales valve at the tank battery or sales meter. 11
(2) The county assessor shall assess all producing mineral 12
interests in the county. 13
(3)(A) The county assessor shall assess the mineral interests in 14
the land separate from the fee simple interest in the land when the: 15
(i) Mineral interests in the land are held by one 16
(1) or more persons that are different from the person or persons holding the 17
fee simple interest; and 18
(ii) County assessor is advised of the separate 19
holdings by the recording of a deed in the county recorder's office. 20
(B) When subdivision (a)(3)(A) of this section applies, a 21
sale of the mineral interests for nonpayment of taxes shall not affect the 22
title to the land itself, nor shall a sale of the land for nonpayment of 23
taxes affect the title to the mineral interests. 24
(4)(A) The county assessor shall assess all production equipment 25
as real property. 26
(B)(i) Except as stated under subdivision (a)(4)(B)(ii) of 27
this section, when assessing the value of production equipment, the county 28
assessor shall assess the production equipment at a value of one dollar 29
($1.00) per foot. 30
(ii) Any portion of the casing in a well that has 31
been rendered inoperable for producing oil or gas by a cement or mechanical 32
plug shall not be subject to taxation. 33
(5) If an oil a well reported production in a prior year and 34
reports an annual increase in average daily production, the annual increase 35
in average daily production shall be assessed as newly discovered property 36 HB1937
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only if the annual increase in average daily production is solely 1
attributable to new production from a geologic zone or horizon that was not 2
produced in a prior year from the existing oil well. 3
(6)(A) In calculating the working interest -assessed value of an 4
oil a well, the county assessor shall apply a uniform expense allowance per 5
barrel of oil or one thousand (1,000) cubic feet of gas produced without 6
regard to the average daily production of the oil well. 7
(B) The expense allowance under subdivision (a)(6)(A) of 8
this section shall be based as nearly as practicable on actual expenses per 9
barrel of oil or one thousand (1,000) cubic feet of gas produced. 10
(7) In assessing the value of an oil a well based on an income 11
approach, the income shall be based on the actual average price per barrel of 12
oil or one thousand (1,000) cubic feet of gas in Arkansas during the 13
immediately preceding calendar year. 14
(8) All formulas, valuation tables, and guidance that are 15
published or provided to the county assessors by the Assessment Coordination 16
Division to be used in the valuation and appraisal of mineral rights for ad 17
valorem tax purposes shall comply with the requirements of this section. 18
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SECTION 3. DO NOT CODIFY. Retroactivity. 20
Section 2 of this act applies retroactively to assessment years 21
beginning on or after January 1, 2022. 22
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