Oil & Gas Taxes
Severance Tax Rates in Louisiana –
- $.288 / MCF through June 30, 2009
- $.331 / MCF Beginning July 1, 2009
- 12.5 % – Full Rate Oil/Condensate
- 6.25% – Incapable Oil
- 3.125% – Stripper Oil Rate
- 3.125% – Reclaimed Oil
A summary of all of Louisiana’s SeveranceTax
Rates, Incentives and Progams can be found here – updated 6.18
Ad Valorem Taxes
Ad valorem taxes are taxes imposed on the value of property
Black’s Law Dictionary 51 (6th ed. 1990)
Ad Valorem Taxes defined by the Louisiana Department of Natural Resources:
The oil and gas statutes of Louisiana and Texas’ statutes do not mention this tax in their respective oil and gas sections. Both states levy this tax on oil and gas properties. Texas taxes both on-site production equipment and reservoirs that are capable of production as determined by the Texas Railroad Commission. Louisiana taxes only the production equipment, not the reservoirs.
Ad valorem taxes are levied and administered by local tax districts. Consequently, tax rates and policies vary widely.
The Louisiana Tax Commission has adopted an attachment for the LAT 12 – Oil & Gas Reporting Form for the 2006 tax year. To receive stripper oil well, incapable gas well, or shut-in well credit, this form will have to be completed and filed with the LAT 12.
There is one aspect of the form we believe requires your immediate attention. In prior years, the decision to grant the 90% shut-in credit was left to the discretion of the assessors based on their respective requirements. Some assessors used the DM 1 R and DT 1 reporting forms to determine shut-in status. Other assessors would use the last quarter production records, and others said a well had to be shut-in for the entire year to qualify. To eliminate this problem of inconsistency, an agreement was reached between industry, the assessor’s association, and the Louisiana Tax Commission. The status of the individual wells as reflected on the Department of Natural Resources web site (SONRIS) will be the only criteria used to establish shut-in status.
It is imperative you review the status code shown on the DNR website (SONRIS) for all your wells which identifies whether a well is shut-in.
Each operator should review the status shown on the SONRIS web site to determine if they have any wells that have an incorrect well status.
If the operator finds there are wells with an incorrect status, the operator needs to send Conservation a corrected report or data reflecting the correct well status and request the change be made as soon as possible. Todd indicated the staff is currently entering the information provided by the operators and this is the time to get that information to them.
Examples of these reports are listed on the attached.
The operator will need to file the LAT 12 Attachment A form with their Oil & Gas reporting forms. (Copy of the form is attached).
We have found that a great many wells listed on the website have not had the status code changed to reflect current well status. An example would be a well that has been shut-in for many years, but still shows a producing well status code because that was the last year the record was reviewed. However, the operator has the responsibility of getting the status codes corrected. Any corrections need to be done by January 1, 2006 or as close to that date as possible.
You can contact Daron Frederickson 405-767-4799 if you have any questions or need further information. If the well status does not reflect one of the shut-in codes, the assessors may refuse to grant shut-in status to your wells.
LDNR Office of Conservation
Status Code Description for Shut-in Wells
Status Code Code Description
08 – Inactive Injection Well (Commercial or Other)
18 – Temporarily Abandoned Well
20 – PA-35 Temporary Inactive Well To Be Omitted From Production Report
22 – Reverted To Single Completion
27 – Abandoned SWD – Not Plugged
28 – Unable to Locate Well – No Plugged and Abandoned
31 – Shut-in Dry Hole – Future Utility
32 – Shut-in Dry Hole – No Future Utility
33 – Shut-in Productive – Future Utility
34 – Shut-in Productive – No Future Utility
36 – Shut-in Waiting on Pipeline
37 – Shut-in Waiting on Market
Most of these codes can be reported on the following reports:
DT 1 Gas Well Deliverability Test
DM 1 R Oil Well Potential Test
The operator may have to check with Conservation regarding shut-in well status codes that are not commonly used. (eg Status Codes 18, 27, 28, 36, & 37)
Read more about the 2005 ADOPTED RULES AND REGULATIONS from the Louisiana Tax Commission.
LOUISIANA TAX COMMISSION WEB SITE (The Louisiana Tax Commission has the responsibility of administering and enforcing aws relating to Local Property Tax Assessments, Assessments of Bank and Insurance Companies and Assessments of Public Utility Properties and to formulate and adopt Rules and Regulations to Insure uniformity of tax assessments throughout the state. The Tax Commission is charged with hearings and decisions regarding property tax valuation disputes. The Tax Commission measures the level of assessments through the Ratio Study process in each parish or district on an annual basis.)
INDUSTRIAL TAX EXEMPTION (This is Louisiana’s original incentive program, for capital investments, and is for manufacturers only. It may be used by manufacturers new to the State as well as new investments and miscellaneous capital additions to existing facilities in Louisiana.)
MILLEAGE RATE FACTORS (To be used in calculating fees for ALL ad valorem tax exemption applications being received in 2004.)
All tax rolls are open for public viewing between August 15th and September 15th each year. The dates may vary somewhat by Parish. The tax rolls must be submitted to the Tax Commissioner for approval by November 15th of each year, although most assessors submit the rolls for approval just after the closing for public viewing. Once the tax rolls are submitted for approval it is virtually impossible to change the taxes. The Louisiana Tax Assessors highly recommend that you view the tax rolls and taxable value of your vessels while the rolls are open for public viewing. If you have any dispute or adjustment to the taxable value of your property now is the time to contact your assessor and discuss the issue.