Oklahoma Senate Passes Tax Hike on Oil and Gas

[CHenry]

Oklahoma rig count falls to seven-month low

http://journalrecord.com/2017/11/03/oklahoma-rig-count-falls-to-seven-month-low/

No surprise there, it is a cyclical industry.
Look at the spike in rigs (barrels produced) in the previous 3 years.

 

[SlugSlinger]

The drilling I see is happening in the Eagle Ford, Wamsutter and the North East, while Oklahoma is declining. This isn't a cycle, this is a trend. Raise production taxes and the curve will just be steeper.

 

[Shadowrider]

And you certainly are more well versed in all this than me but I look at the trends over the years and it just doesnt support what others are saying about the negatives in raising to 4%.
Lest I'm missing something.

It's that it looks better in other places. Yes we have two very good plays going on right now. SCOOP and STACK. But they are strictly horizontal drilling and fracked plays and the decline rates are very fast on them. Not as fast in other areas. And add in that they have already have a ton drilled.... Add WV to that list too. Where are they building all the pipelines at? What's that activity look like? Way more south, east and north from Oklahoma.

 

[RETOKSQUID]

I look at it everyday. My bosses are concerned. There's a hell of a lot more involve than saying it's just 2%. Bottom line is they'll fly the middle finger move to ND and TX.

Isn't ND at a higher rate?

North Dakota

Oil Extraction Tax

• 6.5% of gross oil value
• 4% of gross oil value if well qualifies for reduced rate
• 2% of gross oil value for qualifying wells in Bakken formation
• Oil and Gas Gross Production Tax
  • $0.1143 per MCF of gas (changes annually on July 1)
  • 5% of gross value of natural gas or oil

Oklahoma

Gross Production Severance Tax
Tax on gross production and based on monthly average crude oil and gas prices:

• 7% if oil price equal to or greater than $17 per barrel, gas price equal to or greater than $42.10 per MCF
• 4% if oil price less than $17 but greater than or equal to $14 per barrel, gas price less than $2.10 and greater than or equal to $1.75 per MCF
• 1% if oil price less than $14 per barrel, gas less than $1.75 per MCF
• Petroleum Excise Tax 0.095% of taxable oil or gas value

Texas

Gas and Oil Production Tax

• 7.5% tax of gas market value
• 4.6% tax of oil market value
• 4.6% tax of gas condensate market value for gas condensate
• Incentives and exemptions for inactive wells, marginal wells, and high cost gas wells
  Oil and Gas Field Clean-Up Regulatory Fee
  • $0.06625 per barrel of crude oil
  • $0.000667 per MCF of gas

 

[CHenry]

It's that it looks better in other places. Yes we have two very good plays going on right now. SCOOP and STACK. But they are strictly horizontal drilling and fracked plays and the decline rates are very fast on them. Not as fast in other areas. And add in that they have already have a ton drilled.... Add WV to that list too. Where are they building all the pipelines at? What's that activity look like? Way more south, east and north from Oklahoma.

We have an oil glut in OK. Why drill it now with no where to put it. We know where it is when we have the need.
Why isnt anyone pointing this out?
And why drill it when the price is down when those in the know, just play the waiting game and capitalize on price hikes.

 

[Shadowrider]

Isn't ND at a higher rate?

North Dakota

Oil Extraction Tax

• 6.5% of gross oil value
• 4% of gross oil value if well qualifies for reduced rate
• 2% of gross oil value for qualifying wells in Bakken formation
• Oil and Gas Gross Production Tax
  • $0.1143 per MCF of gas (changes annually on July 1)
  • 5% of gross value of natural gas or oil

Oklahoma

Gross Production Severance Tax
Tax on gross production and based on monthly average crude oil and gas prices:

• 7% if oil price equal to or greater than $17 per barrel, gas price equal to or greater than $42.10 per MCF
• 4% if oil price less than $17 but greater than or equal to $14 per barrel, gas price less than $2.10 and greater than or equal to $1.75 per MCF
• 1% if oil price less than $14 per barrel, gas less than $1.75 per MCF
• Petroleum Excise Tax 0.095% of taxable oil or gas value

Texas

Gas and Oil Production Tax

• 7.5% tax of gas market value
• 4.6% tax of oil market value
• 4.6% tax of gas condensate market value for gas condensate
• Incentives and exemptions for inactive wells, marginal wells, and high cost gas wells
  Oil and Gas Field Clean-Up Regulatory Fee
  • $0.06625 per barrel of crude oil
  • $0.000667 per MCF of gas

Like I'm trying to get through to CHenry. It's not just the rate itself. The money looks better in other areas due to expected total money from the wells. Wells here take 3 years to pay out the cost of drilling and completing. After that 3 years the well is nothing like it was a 3 months after putting it online. They are making money, but it's not what it's portrayed to be by the media. And they are getting better at extending that gap too. They've been at it for 10+ years now and we are just now recently getting to run some 10,000' laterals due to regulation. Other areas they've been doing it for awhile now.

 

[Shadowrider]

We have an oil glut in OK. Why drill it now with no where to put it. We know where it is when we have the need.
Why isnt anyone pointing this out?
And why drill it when the price is down when those in the know, just play the waiting game and capitalize on price hikes.

Why indeed? Lets stop and then that 25% of all taxes paid to the state will stop too.

 

[CHenry]

Why indeed? Lets stop and then that 25% of all taxes paid to the state will stop too.

lol, the state put all their eggs in one basket and you wanna blame oil production practices on that?

 

[rc508pir]

Not only this, look at what the surrounding states tax rates on the industry are. Hint, it isnt 2% or below.

Yeah its like 6 or 7 % isn't it?

 

[RETOKSQUID]

Like I'm trying to get through to CHenry. It's not just the rate itself. The money looks better in other areas due to expected total money from the wells. Wells here take 3 years to pay out the cost of drilling and completing. After that 3 years the well is nothing like it was a 3 months after putting it online. They are making money, but it's not what it's portrayed to be by the media. And they are getting better at extending that gap too. They've been at it for 10+ years now and we are just now recently getting to run some 10,000' laterals due to regulation. Other areas they've been doing it for awhile now.

Got it.