I have a royalty interest in 8 vertical wells operated by Scout Energy in Martin Co, TX. On my June 2020 royalty statement, there was a retroactive reimbursement of 50% of the oil severance tax collected on these wells for production months 05/2020 through 12/2020. The original severance tax deduction in 2020 was the normal 4.6%. Did TX enact some type of special severance tax relief for 2020 to help the producers impacted by Covid oil demand slump?
The oil severance tax rate is reduced for low-volume oil wells when the oil price is $30 or less. The oil severance tax rate exemption is 25% when price is $25-$30 - 50% when price is $22-$25 and 100% if price is less than $22. There were months of low prices in 2020. You can see the months that an oil well has qualified on the TX Comptroller CONG website. Select Lease Search by Lease Number and enter the oil lease number (add a leading zero to make it 6 digits instead of 5 digits) and the county. Eligible wells will have Yes button to select and then an exemption number - e.g. 11 for low volume oil wells. You will see the eligibility and % for each month or ‘suspend’ when prices exceed $30. Low volume wells have production of less than 15 bbl/month per producing well. So if all 8 wells are producing and have the same lease number, then that is a combine 120 bbl per month. The purpose is to encourage operators to not shut in or abandon small volume wells. Of course, no severance reduction at today’s prices.
That is great information. Thank you.
This topic was automatically closed after 90 days. New replies are no longer allowed.