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Permalink Reply by Skip Peel - Mineral Consultant on February 23, 2015 at 11:20

Under the Severance Tax Relief Program, Horizontal well provision, an operator is exempt from paying severance tax on the first 24 months of production of a qualifying well.  There is no requirement for an operator to provide notice to royalty interests.

HORIZONTAL WELL REQUIREMENTS

• Form STRP-HW (.pdf or .xls)
• Detailed Itemized Well Cost Statement  
• Form WH-1  
• Directional Survey  
• First production must commence after July 31, 1994.  
• Well must be horizontally drilled or recompleted with 80° deviation from the vertical and at least a 50 foot penetration into the sand.

Note: Horizontal recompletions are defined as horizontal drilling in an existing well bore. Horizontal recompletion costs are limited to only those costs associated with the horizontal portion of the well bore. Extensions of existing horizontal well bores, in the same sand, are not considered horizontal recompletions.

**Eligible for a two year exemption from the date of first production or until payout of qualified costs, whichever comes first.

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Permalink Reply by Rhonda Berry on February 24, 2015 at 10:03

Chk may not have been required to give notice, but with all of their bad publicity and questionable practices, you would think that they might want to do something positive for once...would take so very little time to do the right thing, for once.

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Permalink Reply by Skip Peel - Mineral Consultant on February 24, 2015 at 10:12

The concept of courtesy to their lessors/royalty interests doesn't seem to register with CHK.  The industry as a whole has done a lousy job of public relations and customer service.  It comes back to bite them when they need public support for issues such as fracking and pipelines.  CHK is guilty of a lot, just not this issue.  When they pay severance tax, they deduct the royalty owners share of that tax.  If they were deducting severance tax when they were not paying it, that would be illegal.

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Permalink Reply by Robert E. Anderson on March 9, 2015 at 20:42

I have noticed the same thing happening with my checks, and can't figure it out. Mine just sarted the beginning of Jan.I am assuming that it can be used  when we pay out taxes.

Bobby Anderson

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Permalink Reply by Skip Peel - Mineral Consultant on March 10, 2015 at 2:48

While the operator is exempt from paying severance tax on a particular well, it is not deducted from your check.  Once the operator begins to pay the tax they will also begin to deduct it from your monthly payment.

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Permalink Reply by Robert E. Anderson on April 15, 2015 at 5:05

Great!

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