AR HB1656

Defines "net proceeds" for gas production as gross proceeds minus applicable taxes, assessments, and either true third-party costs (for integrated interests without a lease) or deductions specifically allowed by lease terms (for executed leases)

Establishes a minimum royalty of one-eighth (1/8) of net proceeds from gas sales payable to royalty owners, while allowing mineral owners to negotiate higher royalties by contract

Requires working interest owners to ensure full royalty payments to mineral owners in compliance with lease terms, regardless of whether the operator or nonoperating working interest owner makes the payment

Mandates reimbursement to royalty owners within 30 days for any deductions or expenses taken that are not specifically allowed by the applicable lease

Excludes from these provisions any wells producing only liquid hydrocarbons, or gas produced in association with liquid hydrocarbon production