Written by Allison Longoria

Louisiana House Bill 30 Proposes Severance Rate Reduction For Oil

LA HB30 was prefiled on February 25, 2021. This Bill proposes several changes to the oil severance tax – it reduces the severance tax rate for oil over a certain period of time and fixes the severance tax rate for oil produced from certain wells at the current rate.

Proposed law reduces the tax rate on oil over an eight-year period from 12.5% as follows:

(1) For taxable periods beginning on or after July 1, 2022, and before July 1, 2023, to 12%.

(2) For taxable periods beginning on or after July 1, 2023, and before July 1, 2024, to 11.5%.

(3) For taxable periods beginning on or after July 1, 2024, and before July 1, 2025, to 11%.

(4) For taxable periods beginning on or after July 1, 2025, and before July 1, 2026, to 10.5%.

(5) For taxable periods beginning on or after July 1, 2026, and before July 1, 2027, to 10%.

(6) For taxable periods beginning on or after July 1, 2027, and before July 1, 2028, to 9.5%.

(7) For taxable periods beginning on or after July 1, 2028, and before July 1, 2029, to 9%.

(8) For taxable periods beginning on or after July 1, 2029, to 8.5%.

Second, it sets the severance tax rate for oil produced from a well incapable of producing an average of more than 25 barrels of oil per producing day during the taxable month, and which also produces at least 50% salt water per producing day, to 6.25%.

Third, it sets the severance tax rate for oil produced from a well that is incapable of producing an average of more than 10 barrels of oil per producing day during the taxable month to 3.125%. 

Fourth, it sets the severance tax rate for oil produced from a well in a stripper field to 3.125%.

Disclaimer: The purpose of this article is to make you aware of certain, potential rule changes. Laws are subject to change and interpretation. Please see official correspondence for official guidance.

Written by Allison Longoria

2020 Memorandum Regarding Force Majeure to Louisiana State Lease Operators

Disclaimer: The purpose of this article is to make you aware of certain informational communication from the Louisiana Office of Mineral Resources (OMR). Laws are subject to change and OMR interpretation. This cannot be relied upon for reporting guidance. Please see official OMR correspondence for official guidance.

Written by Allison Longoria

Louisiana House Bill No. 29 Has Passed and Has Been Sent to Governor for Approval

Louisiana House Bill No. 29 was passed October 2020 and has been sent to the Governor for approval. House Bill 29 will exempt certain oil and gas wells from paying severance taxes on the product produced for up to two years, depending on the type well.

Here is a portion taken directly from the House Bill:

There shall be an exemption from the severance tax levied in this part on oil production from an orphaned, newly drilled, or newly completed well that is undergoing or has undergone well enhancements that required a Department of Natural Resources permit, including but not limited to re-entries, workovers, or plugbacks, from which production commences on or after January 1, 2021, and or before December 31, 2023.  

(aa) The exemption for wells that have undergone well enhancements shall last for a period of six months or until payout of the well cost is achieved, whichever occurs first.

(bb) The exemption for new wells shall last for a period of twelve months or until payout of the well cost is achieved, whichever occurs first.

(cc) The exemption for orphaned wells shall last for a period of twenty-four months or until payout of the well cost is achieved, whichever occurs first.

(dd) The exemption period shall begin the first day of the month after the operator notifies the Department of Revenue that new or post enhancement production has commenced. Notification shall be in a form approved by the secretary of the Department of Revenue.

(ee) There shall be no more than one exemption authorized pursuant to this Subparagraph for any wellhead.

Please see the Louisiana House Bill No. 29 for more details.