Arkansas Governor Issues Executive Order to Assist Independent Oil Producers – Update from PPGMR Law

On May 1, 2020, Arkansas Governor Asa Hutchinson issued Executive Order EO 20-24, finding that:
“The COVID-19 crisis has had a sudden, unforeseeable, and devastating impact on the crude oil
market, and the negative market impact has been exacerbated by external market forces such as
the crude oil price war involving Russia and Saudi Arabia, causing prices to crash to
unprecedented lows.” Daily posted prices in Arkansas fell below a negative $45.00/barrel on
April 20, and have remained in the single digits since. The Governor’s Order directs the
Arkansas Oil & Gas Commission (AOGC) to waive the production assessment fee for six to
twelve months and waive the annual well fee on disposal wells in oil-producing counties. In
addition, the AOGC is directed to “take expedient and reasonable steps to prevent waste of oil or
gas and protect the correlative rights of all parties, including without limitation the imposition of
restrictions on the production or sale of crude oil as are necessary and appropriate during the
severely depressed or negative market prices for crude oil” during the crisis.
Many of Arkansas’ independent producers cannot operate their wells economically at the
severely depressed prices resulting from COVID-19 and the market manipulations by Russia and
Saudi Arabia. Alan Perkins at PPGMR has volunteered his time to work closely with
independent operators, the industry group AIPRO, the AOGC, the Department of Energy &
Environment, and the Governor’s office to help provide an effective mechanism for producers to
shut in wells that cannot be operated economically at these artificially low prices, while
continuing to maintain their leases in force. The AOGC is expected to call a special hearing
within the next two weeks to receive evidence and design a final order.

For more information, please contact G. Alan Perkins, Esq. by clicking here.