Notice: Suspension Of LA Severance Tax On Horizontal Wells

I received this today from some landman friends of mine:

You should all be aware of the provision of LSA – RS: 47.633(7)(c)(iii)(aa) and (bb), , which suspend the ENTIRE Severance Tax on “Horizontal Wells”, as defined in Subparagraph (aa), for a period of (i) 24 months, or (ii) until well payout is achieved, whichever occurs first.

Many Haynesville Operators are either not aware of this provision, or alternatively, are aware of it but aren’t sharing the Severance Tax Suspension savings with the Royalty Owners. Any landowner or royalty owner in any Horizontal Well should contact his/her Operators and make sure that they are aware of this Suspension, are taking advantage of it and are sharing the savings with the Royalty Owner/Landowner.

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StevewPermalink Reply by Stevew on August 22, 2009 at 20:27
FINALLY! Some good news we can use. (at least those happy few who are already getting HS royalties)

Did I express that correctly? Do we get royalties from the HS or the HA?

Seriously, that news from Baron could be worth a lot of money to folks getting these royalties.

many thanks Baron - and I hope my well gets drilled someday so I can put this tidbit to use.
Permalink Reply by The_Baron on August 24, 2009 at 4:18
Just need to stay on your toes and be sure that the operator 1) applies for the credit and 2) passes on the savings to the RI.

Don't want to have the first not occur, or worse, have the first occur and and not the second.
Permalink Reply by The_Baron on August 24, 2009 at 7:43
From what has been provided to me from DNR, operators are encouraged to wait until they have a firm cost figure for the well (as the benifit stops on payout or two years, whichever is first). No afe amounts or estimates are allowed.

The applicant will be retroactivly refunded after being approved. If they have not filed yet, they will be required to collect severance taxes until such time. Just be sure you get refunded as well.
Permalink Reply by Bacon on August 27, 2009 at 10:36
We asked Questar about this and they said the same thing. They will be refunded from the state and then will refund to us. I wonder if there's a way to find out if the well has been approved. On a big well, that will be a big chunk.
Permalink Reply by VSC DeSoto South on April 3, 2011 at 3:35

Is there somewhere on the LA DNR website an owner can track if the exemption permit paperwork has been field and approved for their well?

Permalink Reply by HBP on April 3, 2011 at 7:34

- go to main Sonris page and click on "Data Access" along left side.  Then click "Conservation" 

- The choices on the main part of the screen should change and under Well Information click "Severence Tax Relief Information"  It's a separate app by Oracle so your computer may give you some prompts to actuall get there.

-Once you are in the program, you can search by many fields, but I use the well number.  You have to click "enter query" before typing in the number and then "execute query" after you typed it.  These two buttons are along the top tool bar of the program.

 

I think you will only get info if the operator has actually filed paperwork for the exemption and it may only show that it has not been approved yet.  Also, the payout number it quotes if approved is helpful, but I am not sure it can be relied on to define payout for other reasons (ULMO, or a specific lease clause).  I'm not sure whether payout for the exemption qualification has the same inputs as the calculation for ULMO's payout.  If anyone has some insight on this - let me know.

Permalink Reply by HBP on April 3, 2011 at 7:47

Interesting case in Texas  I have only scanned it and a couple of related articles.  The companies have settled with some landowners and paid the severance tax back, but they seem to deny any obligation to pass on the tax exemption to the landowners.   Wonder if that kind of response will find its way to NW Louisiana?  Does the relief program in LA have any specific stipulations that the landowner receive their portion back?

 

Coll vs. Abaco operating, llc, et al  (US District Court in Eastern District of Texas, Marshall Division, C.A. No. @:08-CV-345 TJW)

Permalink Reply by The_Baron on August 28, 2009 at 2:56
At least untl payout. Which in a HA should not be too long. YOu also have to assume that the operator is smart enough to file. Also, the list of approved expenses for determining payout is a little more restrictive than would be billed to a joint interestr owner or UMI.
Permalink Reply by Bacon on April 3, 2011 at 13:15
I just checked and the Encana well that we participate in was approved for the program end of December.  They have been deducting severance for the last 16 months.  Wonder how long it will take to get a refund.

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