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.
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.
Views: 291
Replies to This Discussion
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landownerPermalink Reply by Spring Branch,mineral owner on -
Thanks for the info, Baron.
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Oil & Gas ProPermalink Reply by The_Baron on -
This could add up to be a considerable amount.
From LDR (Louisiana Dept. of Revenue)
Rate of tax
The tax rate for natural gas and equivalent gas volumes of natural gasoline, casinghead gasoline, and other natural gas liquids per 1,000 cubic feet at a base pressure of 15.025 pounds per square inch absolute and at 60 degrees Fahrenheit is adjusted annually on July 1 and may never be less than 7 cents.
Type Rate
a. Full Rate - 7/1/2009 to 6/30/2010 [R.S. 47:633(9)(d)(i)] $.331 per MCF
b. Incapable oil-well gas [R.S. 47:633(9)] $.03 per MCF
c. Incapable gas-well gas [R.S. 47:633(9)] $.013 per MCF
d. Produced water-full rate 7/1/2009 to 6/30/2010 {R.S. 47:633.5(C)(2)] $.265 per MCF
e. Produced water-incapable oil-well gas [R.S. 47:633.5(C)(2)] $.024 per MCF
f. Produced water-incapable gas-well gas [R.S. 47:633.5(C)(2)] $.0104 per MCF
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landownerPermalink Reply by redrivergal on -
Baron,
I've never heard of this. Can you give us a little more info. (e.g. the source of this material--not the name of the person or persons who gave it to you, but the actual source, and the date it went into effect?) Thx very much.
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landownerPermalink Reply by Bacon on -
SEVERANCE TAX SUSPENSIONS
2. Horizontal mining and
drilling projects STATUTORY CITATION: R.S. 47:633(7)(c)(ii)(aa)
The working-interest owners of horizontal mining and drilling projects ap-
proved by the Office of Conservation are taxed at the special reduced rate of
3.125 percent of value until the cumulative value of hydrocarbon production
from the project equals 2.33 times the private investment invested by the work-
ing interest owners. Origin: Acts 1990, No.551
2) Horizontal wells STATUTORY CITATION: R.S. 47:633(7)(c)(iii)
On any horizontally drilled well or any horizontal recompletion from which
production commences after July 31, 1994, all severance tax shall be sus-
pended for a period of 24 months or until payout of well cost is achieved,
whichever comes first. Payout of well cost shall be the cost of completing
the well to commencement of production.
Doesn't appear to be a new thing.
http://dnr.louisiana.gov/sec/execdiv/techasmt/facts_figures/la_seve...
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landownerPermalink Reply by redrivergal on -
Thx a lot.
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Oil & Gas ProPermalink Reply by The_Baron on -
I believe it was enacted to encourage horizontal drilling in the austin chalk.
There are also provisions for deep wells, vertical depth >15,000' and inactive wells.
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landownerPermalink Reply by Bacon on -
While Googling the statute # I saw this and am wondering what became of this proposed bill? It repeals these exemptions and is dated 5/27/09.
http://www.legis.state.la.us/billdata/streamdocument.asp?did=655574
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Oil & Gas ProPermalink Reply by The_Baron on -
As per the LA legislature website, it never made it out of committee.
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landownerPermalink Reply by Robby on -
Is severance tax suspension on horizontal wells applicable to royalty owners also or just the operator?
Robby
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Oil & Gas ProPermalink Reply by The_Baron on -
It suspends ALL severance taxes until payout or two years whichever occurs first. In the case of a good HA well payout will most likely occur in less than two years.
My initial post was to alert WI and RI owners that some operaors were not applying or even possibly not passing the savings on. If they have been approved, and severance taxes are not due, but they are taking them from you anyway, they are stealing your money.
More likely though, some operators are unaware of this program. IK have been suprised at how many people I have spoke to in the oil buisness that are unaware (granted, most don't drill deep wells or horizontals).
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Oil & Gas ProPermalink Reply by The_Baron on -
I am not sure. But there is a good deal of paperwork involved that is filed with the state.
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