Oklahoma Severance Tax

Oklahoma currently has legislation moving through the house that could change these numbers, so please double check them.  In 2011, OK extended the sunset date for its Petroleum Excise Tax to 2016, a 5 year extension.

Oklahoma oil severance tax is currently 7% of taxable value because oil prices are above $17/bbl.  The tax would fall to 4% if oil price were between $14 and $17 per bbl and would drop to 1% is oil prices were less than $14/bbl.

Oklahoma gas severance tax is also 7% of taxable value because natural gas prices are above $2.10/mcf.  The tax would fall to 4% if gas prices were between $1.75 and $2.10 per mcf and would fall to 1% if gas prices were below $1.75/mcf.

Oklahoma currently has no coal or timber severance tax at this time.

Wyoming severance tax

Wyoming has had a severance tax in place since 1969 (flat 1% tax at that time).  Wyoming is one of the top producers of oil (8th), natural gas (2nd) and coal (1st) in the US.  The current severance tax rates were put into place in 2010.  Wyoming severance taxes totaled $878 million in 2009.

Current Wyoming severance tax rates:

Oil: 6%

Stripper oil: 4%

Natural gas: 6%

Surface coal: 7%

Underground coal: 3.75%

Trona and uranium: 4%

Wyoming does not have a severance tax on timber at this time.

 

Arkansas severance tax

2012 Note: Please double check with the Arkansas state website for current tax rates.  Arkansas have a bill working its way through the state legislature that may end up on the 2012 ballot for voters.

Here are the current Arkansas severance tax rates:

Oil: 4% of market value for wells that produce 10 barrels or less per day.  5% of market value for wells that produce more than 10 barrels per day.

Natural Gas: 1.25% on marginal gas, which is defined as wells producing 250mcf or less per day.  1.5% for new discovery gas for the first 24 months of production and 1.5% for high cost gas for the first 36 months of production.  5% on all other gas production.

Coal, lignite, and iron ore – $0.02 per ton plus an additional $0.08 per ton on coal.

Gypsum – $0.015 per ton
Salt water – $2.45 per 1000 barrels from bromide extraction (additional brine)

Stone & crushed stone – $0.04 cents per ton of 2,000 lbs.

Timber (Pine) – $0.178 per ton

Timber (all other) – $0.125 per ton

 

Louisiana Severance Tax

Louisiana severance tax laws are somewhat complex compared to other states.  There are many separate categories for each industry.  See the guide below for each industry:

Natural gas:

  1. $0.164 per mcf for full rate wells
  2. $0.03 per mcf for incapable oil-well gas
  3. $0.013 per mcf for incapable gas-well gas
  4. $0.131 per mcf for produced water full rate wells
  5. $0.024 per mcf for produced water incapable oil-well gas
  6. $0.0104 per mcf for produced water incapable gas-well gas

Oil:

  1. 12.5% of value for full rate oil / condensate
  2. 6.25% of value for incapable oil wells
  3. 3.125% of value for stripper and reclaimed oil
  4. 10% of value for produced water full rate
  5. 5% of value for produced water incapable oil
  6. 2.5% of value for water-stripper oil

NOTE: Stripper oil is tax exempt if oil prices are below $20 per barrel

Timber:

  1. 2.25% of current stumpage value for trees and timber
  2. 5% of current stumpage value for pulpwood

Minerals:

  1. $1.03 per ton for sulphur
  2. $0.06 per ton for salt
  3. $0.20 per ton for marble
  4. $0.03 per ton for stone
  5. $0.06 per ton for sand or shells
  6. $0.005 per ton for brine salt when used in manufacture of other products
  7. $0.12 per ton for lignite

Definitions used above:

  1. Incapable oil wells are defined as wells that produce less than 25 barrels per day and which also produces at least 50% salt water per day.  For gas, an incapable well has wellhead pressure of less than 50 psi and less than 250mcf daily production.
  2. Stripper oil wells are wells that produce less than 10 barrels of oil per day
  3. Reclaimed oil is salvaged via class one salvage crude reclamation facilites

Colorado Severance Tax

Colorado severance tax is calculated on a progressive basis.  Tax is based on gross income and is as follows:

  • Under $25,000 annually: 2%
  • $25,000 – $99,999 annually: 3%
  • $100,000 – $299,999 annually: 4%
  • $300,000 or more: 5%

There are two exceptions to severance tax in Colorado:

  1. Oil wells that produce an average of 15 barrels per day (averaged over the entire year)
  2. Natural gas wells that produces less than 90mcf of gas per day (averaged over the entire year)

The state of Colorado offers a very generous property tax deduction.  This deduction allows for 87.5% of all taxes paid to counties, cities and schools to be written off.  This leaves many producers owing no severance tax and reduces the nominal rate to the 2-3% range.

The coal severance tax in Colorado is $0.36 per ton with no tax on the first 300,000 tons of each quarter.  There are also some deductions for coal from underground mines and lignitic coal.

Texas Severance Tax

The standard rates for Texas severance tax are as follows:

  • Oil: 4.6% of market value of oil produced
  • Natural Gas: 7.5% of market value of gas produced
  • Condensate: 4.6% of market value

Texas has several incentive programs currently in place.  Amongst them are several incentives to lower severance taxes for equipment and marginal wells.  The marginal well clause includes 3 tiers for both oil and natural gas wells.

For natural gas, a marginal well is one that produces less than 90mcf of gas per day (averaged out over the last 3 months).  Here are the tax reduction tiers:

  1. 25% tax credit if gas prices are between $3 and $3.50 mcf
  2. 50% tax credit if gas prices are between $2.50 and $3 mcf
  3. 100% tax credit if gas prices are lower than $2.50 mcf

A marginal oil well is one that produces 15 barrels or less per day (averaged over last 3 months) or a well that produces 5% or less recoverable oil per barrel of water.  The tax reduction tiers are as follows:

  1. 25% tax credit if oil prices are between $25 and $30
  2. 50% tax credit if oil prices are between $22 and $25
  3. 100% tax credit if oil prices are lower than $22 per barrel

You can find the complete list of Texas severance tax incentives here.