15-36-304. (Effective January 1, 1996) Production tax rates imposed on oil and natural gas. (1) The production of oil and natural gas is taxed as provided in this section. The tax is distributed as provided in 15-36-324.
     (2) Natural gas is taxed on the gross taxable value of production based on the type of well and type of production according to the following schedule for working interest and nonworking interest owners:
     
          Working     Nonworking
          Interest      Interest
     (a) pre-1985 wells      18.55%     14.8%
     (b) post-1985 wells
     (i) first 12 months of
qualifying production      0.5%     14.8%
     (ii) next 12 months of
qualifying production     12.5%     14.8%
     (iii) after 24 months     12.5%     14.8%
     (c) stripper natural gas
     pre-1985 and post-1985 wells     11%     14.8%
     

     (3) The reduced tax rates under subsections (2)(b)(i) and (2)(b)(ii) on production for the first 24 months of natural gas production from a post-1985 well begin following the last day of the calendar month immediately preceding the month in which natural gas is placed in a natural gas distribution system, provided that notification has been given to the department.
     (4) Oil is taxed on the gross taxable value of production based on the type of well and type of production according to the following schedule for working interest and nonworking interest owners:
     
     
          Working     Nonworking
     
          Interest      Interest
     (a) primary recovery production
     (i) pre-1985 wells     18.55%     14.8%
     (ii) post-1985 wells
     (A) first 12 months of
qualifying production     0.5%     14.8%
     (B) next 12 months of
qualifying production     7.5%     14.8%
     (C) after 24 months     12.5%     14.8%
     (b) stripper oil production
     (i) pre-1985 wells     10.5%     16.9%
     (ii) post-1985 wells     10.5%     14.8%
     (iii) stripper exemption production
     (A) pre-1985 wells     5.5%     16.9%
     (B) post-1985 wells     5.5%     14.8%
     (c) horizontally completed
well production
     (i) first 18 months of
qualifying production     0.7%     5.7%
     (ii) next 6 months of
qualifying production     7.7%     12.7%
     (iii) after 24 months     12.5%     12.5%
     (d) incremental production
     (i) new or expanded secondary recovery production
     (A) pre-1985 well     8.5%     16%
     (B) post-1985 well     8.5%     10.5%
     (ii) new or expanded tertiary production
     (A) pre-1985 well     5.8%     15%
     (B) post-1985 well     5.8%     9.5%
     (e) horizontally recompleted well
     (i) first 18 months     5.5%     5.5%
     (ii) after 18 months     12.5%     12.5%
     

     (5) (a) The reduced tax rates under subsections (4)(a)(ii)(A) and (4)(a)(ii)(B) for the first 24 months of oil production from a post-1985 well begin following the last day of the calendar month immediately preceding the month in which oil is pumped or flows, provided that notification has been given to the department.
     (b) (i) The reduced tax rates under subsection (4)(c)(i) and (4)(c)(ii) on oil production from a horizontally completed well for the first 24 months of production begin following the last day of the calendar month immediately preceding the month in which oil is pumped or flows, provided that the well has been certified as a horizontally completed well to the department by the board.
     (ii) The reduced tax rate under subsection (4)(e)(i) on oil production from a horizontally recompleted well for the first 18 months of production begins following the last day of the calendar month immediately preceding the month in which oil is pumped or flows, provided that the well has been certified as a horizontally recompleted well to the department by the board.
     (c) Incremental production is taxed as provided in subsection (4)(d) if the average price per barrel of oil as reported in the Wall Street Journal for west Texas intermediate crude oil during a calendar quarter is less than $30 a barrel. If the price of oil is equal to or greater than $30 a barrel in a calendar quarter as determined in subsection (5)(d), incremental production is taxed at the rate imposed on primary recovery production under subsection (4)(a)(i) for production occurring in that quarter.
     (d) For the purposes of subsection (5)(c), the average price per barrel must be computed by dividing the sum of the daily price for west Texas intermediate crude oil as reported in the Wall Street Journal for the calendar quarter by the number of days on which the price was reported in the quarter.
     (6) The tax rates imposed under subsections (2) and (4) on working interest owners and nonworking interest owners must be adjusted to include the privilege and license tax adopted by the board of oil and gas conservation pursuant to 82-11-131.

     History: En. Sec. 4, Ch. 451, L. 1995. amd. Sec. 3, Ch. 571, L. 1995; amd. Sec. 2, Ch. 573, L. 1995; amd. Sec. 4, Ch. 581, L. 1995.