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A BILL TO BE ENTITLED
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AN ACT
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relating to the appraisal for ad valorem tax purposes of a real |
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property interest in oil or gas in place. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 23.175(a), Tax Code, is amended to read |
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as follows: |
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(a) If a real property interest in oil or gas in place is |
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appraised by a method that takes into account the future income from |
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the sale of oil or gas to be produced from the interest, the method |
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must use the average price of the oil or gas from the interest for |
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the preceding calendar year multiplied by a price adjustment factor |
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as the price at which the oil or gas produced from the interest is |
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projected to be sold in the current year of the appraisal. The |
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average price for the preceding calendar year is calculated by |
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dividing the sum of the monthly average prices for which oil and gas |
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from the interest was selling during each month of the preceding |
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calendar year by 12. If there was no production of oil or gas from |
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the interest during any month of the preceding calendar year, the |
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average price for which similar oil and gas from comparable |
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interests was selling during that month is to be used. Except as |
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otherwise provided by this subsection, the [The] chief appraiser |
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shall calculate the price adjustment factor by dividing the spot |
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price of West Texas Intermediate [imported low-sulfur light] crude |
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oil in nominal dollars per barrel or the spot price of natural gas |
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at the Henry Hub in nominal dollars per million British thermal |
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units, as applicable, as projected for the current calendar year by |
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the United States Energy Information Administration in the most |
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recently published edition [Early Release Overview] of the Annual |
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Energy Outlook by the spot price of West Texas Intermediate |
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[imported low-sulfur light] crude oil in nominal dollars per barrel |
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or the spot price of natural gas at the Henry Hub in nominal dollars |
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per million British thermal units, as applicable, for the preceding |
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calendar year as stated in the same report. If as of February 1 of |
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the current calendar year the most recently published edition of |
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the Annual Energy Outlook was published before December 1 of the |
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preceding calendar year, the chief appraiser shall use the |
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projected and preceding calendar year spot price of West Texas |
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Intermediate crude oil in nominal dollars per barrel or the spot |
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price of natural gas at the Henry Hub in nominal dollars per million |
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British thermal units, as applicable, as stated in the Short-Term |
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Energy Outlook report published in January of the current calendar |
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year by the United States Energy Information Administration in the |
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price adjustment factor calculations. The price for the interest |
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used in the second through the sixth calendar year of the appraisal |
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may not reflect an annual escalation or de-escalation rate that |
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exceeds the average annual percentage change from 1982 to the most |
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recent year for which the information is available in the producer |
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price index for domestically produced petroleum or for natural gas, |
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as applicable, as published by the Bureau of Labor Statistics of the |
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United States Department of Labor. The price for the interest used |
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in the sixth calendar year of the appraisal must be used in each |
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subsequent year of the appraisal. |
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SECTION 2. This Act applies only to the appraisal for ad |
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valorem tax purposes of a real property interest in oil or gas in |
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place for a tax year beginning on or after the effective date of |
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this Act. |
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SECTION 3. This Act takes effect January 1, 2016. |