SRC-AAA C.S.S.B. 1440 75(R)BILL ANALYSIS


Senate Research CenterC.S.S.B. 1440
By: Wentworth
Finance
5-2-97
Committee Report (Substituted)


DIGEST 

Currently, there are no tax breaks to oil and gas leases which show a
sustained increase in production.  Lower product wells have high
production costs and smaller profits.  This bill provides for a tax break
for those oil and gas leases which show a sustained increase in
production, creating an incentive for those operators to invest in
production-enhancing activity.  

PURPOSE

As proposed, S.B. 1440 provides for a tax break for those oil and gas
leases which show a sustained increase in production creating an incentive
for those operators to invest in production-enhancing activity.  

RULEMAKING AUTHORITY

Rulemaking authority is granted to the Railroad Commission of Texas in
SECTION 2 (Section 202.057(e), Tax Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 201.058, Chapter 201B, Tax Code, to require
certain operators increasing production by  marketing gas from an oil well
or lease that has been released for 12 months or more, pursuant to the
rules of the Railroad Commission of Texas, to be entitled to an exemption
from tax imposed by this chapter.  Makes a conforming change. 

SECTION 2. Amends Chapter 202B, Tax Code, by adding Section 202.057, as
follows: 

Sec.  202.057.  TAX CREDIT FOR INCREMENTAL PRODUCTION TECHNIQUES. Defines
"baseline production," "commission," "incremental production,"
"incremental production techniques," "incremental ratio," "qualifying
lease," and "qualified incremental production."  Provides that an operator
of a qualifying lease is entitled to a 50 percent tax exemption on that
lease's qualified incremental production for five years provided that
certain provisions are met.  Requires this section to be suspended if
certain provisions are met.  Sets forth requirements for receiving a
credit against taxes imposed by this chapter. Requires the Railroad
Commission of Texas to adopt rules necessary to administer this section. 

SECTION 3. Effective date: September 1, 1997.

SECTION 4. Emergency clause.

SUMMARY OF COMMITTEE CHANGES

SECTION 1.

Makes nonsubstantive changes.



 SECTION 2.

Amends Section 202.057, Tax Code, to revise the definition of "baseline
production," "incremental production techniques," "incremental ratio," and
"qualifying lease."