By Holzheauser H.B. No. 3491
Substitute the following for H.B. No. 3491:
By Craddick C.S.H.B. No. 3491
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to tax exemptions on oil and gas production:
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subchapter B, Chapter 201, Section 201.058 Tax
1-5 Code, is amended to read as follows:
1-6 Sec. 201.058. Tax Exemptions. (a) The exemptions described
1-7 by Sections 202.056, 202.057, and 202.059 apply to the taxes
1-8 imposed by this chapter as authorized by and subject to the
1-9 certification and approvals required by those sections.
1-10 (b) Operators increasing production by marketing gas from an
1-11 oil well or lease that has been released into the air for 12 months
1-12 or more pursuant to the rules of the commission shall be entitled
1-13 to an exemption from the tax imposed by this chapter on the
1-14 production resulting from the marketing of such gas for the life of
1-15 the well or lease.
1-16 SECTION 2. Subchapter B, Chapter 202, Tax Code, is amended
1-17 by adding Section 202.057 to read:
1-18 Sec. 202.057. TAX CREDIT FOR INCREMENTAL PRODUCTION
1-19 TECHNIQUES. (a) In this section:
1-20 (1) "Baseline production" means a lease's average
1-21 monthly production during the four highest months of production in
1-22 the time period from January 1, 1996 through December 1996.
1-23 (2) "Commission" means Railroad Commission of Texas.
1-24 (3) "Incremental production" means production from a
2-1 qualifying lease in excess of the baseline production.
2-2 (4) "Incremental production techniques" means any
2-3 primary, secondary or tertiary production enhancement technique
2-4 which causes incremental production from an existing oil lease or
2-5 from a newly drilled single completion well on an existing lease.
2-6 (5) "Incremental ratio" means the amount of a
2-7 qualifying lease's average monthly incremental production during
2-8 the four-month period utilized to meet the definition of a
2-9 qualifying lease divided by its average monthly total production
2-10 during the same four month period.
2-11 (6) "Qualifying lease" means a commission designated
2-12 oil lease whose production during the four-month period used in
2-13 computing the baseline is no more than seven (7) barrels-of-oil
2-14 equivalents (BOE) per day per well (excluding gas flared pursuant
2-15 to the rules of the commission) that has shown incremental
2-16 production for four (4) of five (5) consecutive months during the
2-17 effective period of this bill and after performing an incremental
2-18 production technique within the lease. For purposes of qualifying
2-19 a lease, production per well per day is measured by dividing the
2-20 sum of lease production during the four highest months of
2-21 production in the baseline period by the sum of the number of
2-22 well-days, where a well day is one well producing for one day.
2-23 (7) "Qualified incremental production" means the
2-24 lease's monthly total production multiplied by the incremental
2-25 ratio.
2-26 (b) An operator of a qualifying lease is entitled to a fifty
2-27 percent (50%) tax exemption on that lease's qualified incremental
3-1 production for 5 years provided that:
3-2 (1) the incremental production required to define a
3-3 qualifying lease occurred after the effective date of this bill and
3-4 before December 31, 1998; and
3-5 (2) the operator of a qualifying lease applies to the
3-6 Commission for a determination of a lease's incremental ratio
3-7 before February 11, 1999; and
3-8 (3) the operator provides to the Comptroller of Public
3-9 Accounts a commission-certified incremental ratio.
3-10 (c) If the Comptroller of Public Account's average taxable
3-11 price of crude oil reaches $25.00 per barrel, adjusted to 1997
3-12 dollars, for three consecutive months, then the tax credit under
3-13 this section shall be suspended until the price drops below $25.00
3-14 per barrel, adjusted to 1997 dollars, for three consecutive months.
3-15 (d) If the tax is paid at the full rate provided by Section
3-16 201.052(a), 201.052(b), 202.052(a), or 202.052(b) before the
3-17 comptroller approves an application for an exemption provided in
3-18 this chapter, the operator is entitled to a credit against taxes
3-19 imposed by this chapter in an amount equal to the fifty percent
3-20 (50%) of the tax paid on the incremental production. To receive a
3-21 credit, the operator must apply to the comptroller for the credit
3-22 not later that the first anniversary after the date the commission
3-23 certifies the incremental ratio for a qualifying lease.
3-24 (e) The commission may enact rules necessary to administer
3-25 the provisions of this section.
3-26 SECTION 3. This Act takes effect September 1, 1997.
3-27 SECTION 4. The importance of this legislation and the
4-1 crowded condition of the calendars in both houses create an
4-2 emergency and an imperative public necessity that the
4-3 constitutional rule requiring bills to be read on three several
4-4 days in each house be suspended, and this rule is hereby suspended.