Crude Oil Production is a Tax imposed on the production of crude oil in Texas at its market value.
The rate is based on the type of production or recovery. The rate of oil production tax is equal to 4.6% of market value of oil. Reduced Oil Production Tax Rates exist for Certified Exemptions: Enhanced Oil Recovery Exemption 2.3% of market value of oil; Incremental Production Exemption 2.3% of market value of oil; Co-Production Project Exemption 2.3% of market value of oil; Three Year and Two Year Inactive Well Exemptions 9% of market value of oil. Regulatory Tax: 3/16 of a cent (%.001875) per barrel. Regulatory Fee: 5/16 of a cent ($.003125) per barrel for report periods prior to September 2001. For report periods September 2001 and later, 5/8 of a cent ($0.00625) per barrel.
Tax Exemption for Qualifying Low Producing Oil Leases
The Texas Legislature has provided a crude oil severance tax exemption for low producing oil leases. The exemption took effect September 1, 2005.
Natural Gas Production Tax
A Natural Gas Production tax is imposed on the market value of gas produced and saved in the state by the producer. Note: Reduced Gas Production Tax Rates exist for Certified Exemptions: Incremental Production Exemption 3.75% (.0375) of market value of gas; 3 Year and 2 Year Inactive Well Exemptions 0.0% of market value of gas; Co-Production Project Exemption 0.0% of market value of gas; High-Cost Gas Exemption 0.0% of market value of gas; High-Cost Gas Reduced Tax Rate 0.0% to 7.4% (.000 to .074) of the market value of gas, the rate varies by well depending on how the well's drilling and completion costs compare to the median cost of all High-Cost gas wells (previous State fiscal year); Flared Gas Exemption 0.0% (.000) of market value of gas.
Various Rates apply: Gas: 7.5% (.075) of market value of gas.
Condensate Production Tax: 4.6% (.046) of market value of gas.
Regulatory Fee: For report period prior to September 2001, 1/30 of a cent (.000333) for thousand cubic feet of gas produced. For report periods September 2001 and later, .000667 for thousand cubic feet of gas produced.
