15-36-304. (Temporary) 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	15.15%	14.8%
	(c) stripper natural gas pre-1985
	and post-1985 wells	11%	14.8%
	(d) post-1999 wells
	(i) first 12 months of qualifying
	production	0.5%	14.8%
	(ii) after 12 months	9%	14.8%
	(e) horizontally completed well production
	(i) first 18 months of qualifying
	production	0.5%	14.8%
	(ii) after 18 months	9%	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 and under subsection (2)(d)(i) on production for the first 12 months of natural gas production from a post-1999 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) The reduced tax rate under subsection (2)(e)(i) on production from a horizontally completed well for the first 18 months of production begins 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.
     (5) 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	13.9%	16.9%
	(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%
	(iii) post-1999 wells
	(A) first 12 months of qualifying
	production	0.5%	14.8%
	(B) after 12 months	9%	14.8%
	(b) stripper oil production
	(i) first 1 through 10 barrels a day production	5.5%	14.8%
	(ii) more than 10 barrels a day production	9.0%	14.8%
	(iii) stripper well exemption production	0.5%	14.8%
	(c) horizontally completed well production
	(i) post-1985 wells
	(A) first 18 months of qualifying
	production	0.5%	5.5%
	(B) next 6 months of qualifying
	production	7.5%	12.5%
	(C) after 24 months	12.5%	12.5%
	(ii) post-1999 wells
	(A) first 18 months of qualifying
	production	0.5%	14.8%
	(B) after 18 months	9%	14.8%
	(d) incremental production
	(i) new or expanded secondary recovery production
	(A) pre-1985 wells	8.5%	16%
	(B) post-1985 wells	8.5%	10.5%
	(C) post-1999 wells	8.5%	14.8%
	(ii) new or expanded tertiary production
	(A) pre-1985 wells	5.8%	15%
	(B) post-1985 wells	5.8%	9.5%
	(C) post-1999 wells	5.8%	14.8%
	(e) horizontally recompleted well
	(i) first 18 months of production
	(A) post-1985 wells	5.5%	5.5%
	(B) post-1985 [1999] wells	5.5%	14.8%
	(ii) after 18 months
	(A) post-1985 wells	12.5%	12.5%
	(B) post-1999 wells	9%	14.8%

     (6) (a) The reduced tax rates under subsections (5)(a)(ii)(A) and (5)(a)(ii)(B) for the first 24 months of oil production from a post-1985 well and subsection (5)(a)(iii)(A) for the first 12 months of oil production from a post-1999 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 subsections (5)(c)(i)(A) and (5)(c)(i)(B) on oil production from a horizontally completed well for the first 24 months of production from a post-1985 well and under subsection (5)(c)(ii)(A) on oil production from a horizontally completed well for the first 18 months of production from a post-1999 well 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 rates under subsection (5)(e)(i) on oil production from a horizontally recompleted well for the first 18 months of production from a post-1985 well or post-1999 well 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 (5)(d) if the average price for each 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 (6)(d), then incremental production from pre-1985 wells, from post-1985 wells, and from post-1999 wells is taxed at the rate imposed on primary recovery production under subsections (5)(a)(i), (5)(a)(ii)(C), and (5)(a)(iii)(B), respectively, for production occurring in that quarter.
     (d) For the purposes of subsection (6)(c), the average price for each 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.
     (7) The tax rates imposed under subsections (2) and (5) 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. (Effective January 1, 2000)
     15-36-304. (Effective January 1, 2000) . 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) (i) first 12 months of qualifying
	production	0.5%	14.8%
	(ii) after 12 months
	(A) pre-1999 wells	14.8%	14.8%
	(B) post-1999 wells	9%	14.8%
	(b) stripper natural gas pre-1999 wells	11%	14.8%
	(c) horizontally completed well production
	(i) first 18 months of qualifying
	production	0.5%	14.8%
	(ii) after 18 months	9%	14.8%

     (3) The reduced tax rates under subsection (2)(a)(i) on production for the first 12 months of natural gas production from a well begins 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) The reduced tax rate under subsection (2)(c)(i) on production from a horizontally completed well for the first 18 months of production begins 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.
     (5) 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) first 12 months of qualifying
	production	0.5%	14.8%
	(ii) after 12 months
	(A) pre-1999 wells	12.5%	14.8%
	(B) post-1999 wells	9%	14.8%
	(b) stripper oil production
	(i) first 1 through 10 barrels a day production	5.5%	14.8%
	(ii) more than 10 barrels a day production	9.0%	14.8%
	(c) stripper well exemption production	0.5%	14.8%
	(d) horizontally completed well production
	(i) first 18 months of qualifying
	production	0.5%	14.8%
	(ii) after 18 months
	(A) pre-1999 wells	12.5%	14.8%
	(B) post-1999 wells	9%	14.8%
	(e) incremental production
	(i) new or expanded secondary
	recovery production	8.5%	14.8%
	(ii) new or expanded tertiary
	production	5.8%	14.8%
	(f) horizontally recompleted well
	(i) first 18 months	5.5%	14.8%
	(ii) after 18 months
	(A) pre-1999 wells	12.5%	14.8%
	(B) post-1999 wells	9%	14.8%

     (6) (a) The reduced tax rates under subsection (5)(a)(i) for the first 12 months of oil production from a well begins 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 (5)(d)(i) on oil production from a horizontally completed 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 completed well to the department by the board.
     (ii) The reduced tax rate under subsection (5)(f)(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 (5)(e) if the average price for each 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 (6)(d), then incremental production from pre-1999 wells and from post-1999 wells is taxed at the rate imposed on primary recovery production under subsections (5)(a)(ii)(A) and (5)(a)(ii)(B), respectively, for production occurring in that quarter.
     (d) For the purposes of subsection (6)(c), the average price for each 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.
     (7) The tax rates imposed under subsections (2) and (5) 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; amd. Sec. 8, Ch. 466, L. 1997; amd. Sec. 2, Ch. 488, L. 1999; amd. Sec. 2, Ch. 530, L. 1999; amd. Secs. 3, 4, 17(3), Ch. 554, L. 1999.