79R3201 CBH-F
By: West H.B. No. 1202
A BILL TO BE ENTITLED
AN ACT
relating to severance tax credits for continued production from
marginal gas and oil wells.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 201, Tax Code, is amended
by adding Section 201.059 to read as follows:
Sec. 201.059. CREDITS FOR MARGINAL WELLS. (a) In this
section:
(1) "Commission" means the Railroad Commission of
Texas.
(2) "Marginal well" means a commission-designated gas
well whose production averages over a 90-day period less than:
(A) 90 mcf per day; or
(B) 15 percent recoverable gas per barrel of
produced water.
(3) "Mcf" means 1,000 cubic feet of gas as measured in
accordance with Section 91.052, Natural Resources Code.
(b) Each month, the comptroller shall certify the average
taxable price of gas, adjusted to 2005 dollars, during the previous
three months. The comptroller shall publish certifications under
this subsection in the Texas Register.
(c) An operator of a marginal well is entitled to a 25
percent credit on the tax otherwise due on gas produced and saved
from that well during a month if the average taxable price of gas
certified by the comptroller under Subsection (b) for the previous
three-month period is more than $3.25 per mcf but not more than $4
per mcf.
(d) An operator of a marginal well is entitled to a 50
percent credit on the tax otherwise due on gas produced and saved
from that well during a month if the average taxable price of gas
certified by the comptroller under Subsection (b) for the previous
three-month period is more than $2.75 per mcf but not more than
$3.25 per mcf.
(e) An operator of a marginal well is entitled to a 100
percent credit on the tax otherwise due on gas produced and saved
from that well during a month if the average taxable price of gas
certified by the comptroller under Subsection (b) for the previous
three-month period is not more than $2.75 per mcf.
(f) If the tax is paid on gas at the full rate provided by
Section 201.052, the person paying the tax is entitled to a credit
against taxes imposed by this chapter or Chapter 202 on the amount
overpaid. To receive the credit, the person must apply to the
comptroller for the credit not later than the expiration of the
applicable period for filing a tax refund under Section 111.104.
(g) The commission and comptroller shall enact rules
necessary to administer this section, including rules prescribing
procedures for the commission to use in:
(1) determining the daily average production of a well
under this section; and
(2) providing a certified list of those wells to the
comptroller.
SECTION 2. Subchapter B, Chapter 202, Tax Code, is amended
by adding Section 202.058 to read as follows:
Sec. 202.058. CREDITS FOR MARGINAL WELLS. (a) In this
section:
(1) "Commission" means the Railroad Commission of
Texas.
(2) "Marginal well" means a commission-designated oil
well whose production averages over a 90-day period less than:
(A) 15 barrels of oil per day; or
(B) five percent recoverable oil per barrel of
produced water.
(b) Each month, the comptroller shall certify the average
taxable price of oil, adjusted to 2005 dollars, during the previous
three months. The comptroller shall publish certifications under
this subsection in the Texas Register.
(c) An operator of a marginal well is entitled to a 25
percent credit on the tax otherwise due on oil produced from that
well during a month if the average taxable price of oil certified by
the comptroller under Subsection (b) for the previous three-month
period is more than $30 per barrel but not more than $35 per barrel.
(d) An operator of a marginal well is entitled to a 50
percent credit on the tax otherwise due on oil produced from that
well during a month if the average taxable price of oil certified by
the comptroller under Subsection (b) for the previous three-month
period is more than $25 per barrel but not more than $30 per barrel.
(e) An operator of a marginal well is entitled to a 100
percent credit on the tax otherwise due on oil produced from that
well during a month if the average taxable price of oil certified by
the comptroller under Subsection (b) for the previous three-month
period is not more than $25 per barrel.
(f) If the tax is paid on oil at the full rate provided by
Section 202.052, the person paying the tax is entitled to a credit
against taxes imposed by this chapter or Chapter 201 on the amount
overpaid. To receive the credit, the person must apply to the
comptroller for the credit not later than the expiration of the
applicable period for filing a tax refund under Section 111.104.
(g) The commission and comptroller shall enact rules
necessary to administer this section, including rules prescribing
procedures for the commission to use in:
(1) determining the average daily production of a well
under this section; and
(2) providing a certified list of those wells to the
comptroller.
SECTION 3. (a) This Act applies to gas and oil produced on
or after the effective date of this Act. Gas and oil produced
before the effective date of this Act are governed by the law in
effect on the date the gas and oil were produced, and that law is
continued in effect for that purpose.
(b) As soon as practicable after the effective date of this
Act, the comptroller shall perform the initial certification
determination required by Sections 201.059 and 202.058, Tax Code,
as added by this Act. The initial certification determination must
cover the three-month period beginning on June 1, 2005.
(c) The change in law made by this Act does not affect tax
liability accruing before the effective date of this Act. That
liability continues in effect as if this Act had not been enacted,
and the former law is continued in effect for the collection of tax
due and for civil and criminal enforcement of the liability for
those taxes.
SECTION 4. This Act takes effect September 1, 2005.