exemptions. A. As used in this section: 1. Prior to January 1, 2015, "economically at-risk oil or gas lease" means any oil or gas lease operated at a net loss or at a net profit which is less than the total gross production tax remitted for such lease during the previous calendar year; 2. On or after January 1, 2015, and before January 1, 2022, "economically at-risk oil or gas lease" means any oil or gas lease with one or more producing wells with an average production volume per well of ten (10) barrels of oil or sixty (60) MCF of natural gas per day or less operated at a net loss or at a net profit which is less than the total gross production tax remitted for such lease during the previous calendar year; 3. For calendar year 2022 and subsequent calendar years, "economically at-risk oil or gas lease" means any oil or gas lease with one or more producing wells with an average production volume per well of ten (10) barrels of oil or sixty (60) MCF or less of natural gas per day operated at a net loss or at a net profit which is less than the total gross production tax remitted for such lease during the previous calendar year, and any oil lease operating while the gross value of the production of oil is less than Fifty Dollars ($50.00), on an average monthly basis, based on a per-barrel measurement of forty-two (42) U.S. gallons of two hundred thirty-one (231) cubic inches per gallon, computed at a temperature of sixty (60) degrees Fahrenheit or gas lease operating while the gross value of the production of gas is less than Three Dollars and fifty cents ($3.50), on an average monthly basis, based on a measurement of one million (1,000,000) British thermal units (MMBtu); and 4. "Lease" shall be defined as in Section 1001.2 of this title. B. When certified as such pursuant to the provisions of this section, production from an economically at-risk oil or gas lease shall be eligible for an exemption from the gross production tax levied pursuant to subsection B of Section 1001 of this title for production on such lease during the previous calendar year in the following amounts: 1. If the gross production tax rate levied pursuant to subsection B of Section 1001 of this title was seven percent (7%), then the exemption shall equal six-sevenths (6/7) of the gross production tax levied; and 2. If the gross production tax rate levied pursuant to subsection B of Section 1001 of this title was five percent (5%), then the exemption shall equal four-fifths (4/5) of the gross production tax levied. C. For all production exempt from gross production taxes pursuant to this section, a refund of gross production taxes paid for production in the previous calendar year in the amounts specified in subsection B of this section, subject to the limitations and provisions specified in subsections D and J of this section, shall be issued to the well operator or a designee. For production in calendar years ending on or before December 31, 2015, the refund shall not be claimed until after July 1 of the year following the year of production. For production in the calendar year ending December 31, 2016, the refund shall be claimed before July 1, 2017. D. For oil and natural gas produced from qualifying leases in calendar years 2015 and 2016, the total amount of refunds authorized in this section for each calendar year shall not exceed Twelve Million Five Hundred Thousand Dollars ($12,500,000.00) for all products combined. For oil and natural gas produced from qualifying leases in calendar year 2022 and subsequent calendar years, the total amount of refunds authorized in this section for each calendar year shall not exceed Ten Million Dollars ($10,000,000.00) for all products combined. If the amount of claims exceeds the limits provided in this subsection, the Tax Commission shall determine the percentage of the refund which establishes the proportionate share of the refund which may be claimed by any taxpayer so that the maximum amount authorized by this subsection is not exceeded. E. Any operator making application for an economically at-risk oil or gas lease status under the provisions of this section shall submit documentation to the Tax Commission, as determined by the Tax Commission to be appropriate and necessary. F. For the purposes of this section, determination of the economically at-risk oil or gas lease status shall be made by subtracting from the gross revenue of that lease for the previous calendar year severance taxes, if any, royalty, operating expenses of the lease to include expendable workover and recompletion costs for the previous calendar year, and including overhead costs up to the maximum overhead percentage allowed by the Council of Petroleum Accountants Societies (COPAS) guidelines. For the purposes of this calculation, depreciation, depletion or intangible drilling costs shall not be included as lease operating expenses. G. The Tax Commission shall have sole authority to determine if an oil or gas lease qualifies for certification as an economically at-risk oil or gas lease. The Tax Commission shall promulgate rules governing the certification process. H. Except as provided in subsection I of this section, gross production tax exemptions under the provisions of this section shall be limited to production from calendar years 2005 through 2013 and 2022 and subsequent calendar years; provided, no claims for refunds for calendar years 2013 and before shall be paid on or after December 31, 2015. I. Gross production tax exemptions claimed under the provisions of this section shall be limited to production from calendar years 2014, 2015 and 2016; provided, no claims for refunds for the calendar years 2014 and 2015 shall be claimed or paid more than eighteen (18) months after the first day of the fiscal year during which the refund is first available. For production in calendar year 2016, no claim for refund filed on or after July 1, 2017, shall be claimed or paid. J. Claims for refunds pursuant to the provisions of this section for production periods ending on or before December 31, 2016, shall be paid pursuant to the provisions of this subsection. The claims for refunds referenced herein shall be paid in equal payments over a period of thirty-six (36) months. The first payment shall be made after July 1, 2018, but prior to August 1, 2018. The Tax Commission shall provide, not later than June 30, 2018, to the operator or designated interest owner, a schedule of rebates to be paid out over the thirty-six-month period. K. Claims for refunds pursuant to the provisions of this section for production periods beginning and ending on or after calendar year 2022 shall be paid in the form of a one-time payment. Added by Laws 2005, c. 436, § 1, eff. July 1, 2005. Amended by Laws 2007, c. 260, § 2, eff. July 1, 2007; Laws 2010, c. 252, § 2, emerg. eff. May 10, 2010; Laws 2014, c. 346, § 2, eff. July 1, 2014; Laws 2016, c. 383, § 1, eff. July 1, 2016; Laws 2017, c. 336, § 2, eff. July 1, 2017; Laws 2022, c. 346, § 9, eff. July 1, 2022.
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