It seems a lot of us got stuck with outrageously high taxes this year, (at least in Texas). According to knowledgeable people at Mineral Rights Forum, this years taxes were based on an average of what 2019 oil prices were. So my question is: Could next years taxes be lower than usual because they are based on lower2020, (pandemic caused), oil prices?. Could we benefit from the oil crash?.. (LOL)
Yup, there are some benefits to low prices! While 2019 had oil around $56/bbl, 2020 average pricing will be close to $40, or a 29% drop. This is not to say taxes will be 29% less, but commodity pricing is a large part of value. Also, any wells not producing at the end of the year should be reduced significantly in value vs 2020, if they were shut in during the year.
Pritchard & Abbott has quite a bit of documentation (though a bit of dry material) on how Ad Valorem taxes are calculated (since they do a large amount of the mass county appraisals).
http://www.pandai.com/faq/Mineral_FAQ_for_Website.pdf
http://www.pandai.com/faq/Mineral%20FAQ%20No.%2017%20and%2031.Price%20Forecast%20Explanation.pdf
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Thanks!. Lots of useful information, (and not a “dry read” either). Very helpful.
Ames Energy Advisors, now renamed CRA Advisors, LLC , did a great job getting my 2020 tax appraisal reduced in Reeves County, TX.
The Texas Property Tax Code sets the parameters for the valuation of minerals, and specifically set forth that the average monthly price from the preceding tax year be utilized. So in a nutshell, if the lease production remained constant or declined, 2021 appraisals will likelly be lower than 2020.
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