The inactive well exemption from Oklahoma gross production tax came about in 1994 from Senate Bill 841 and Sentate Bill 495 in 1995. Provides for a refund of 6% out of the total 7% gross production tax for production from wells that have not produced oil, gas, or oil and gas for a period of not less than the 2 years prior to July 1, 1994. For wells where production was reestablished on or after July 1, 1997 and prior to July 1, 2012, a 1 year inactivity period is required.
Qualifying wells will receive a gross production tax refund for 28 months from the date the production is reestablished. After June 30, 2003 refunds must be filed within 18 months of the date in which they can first be filed.
Refunds will not be allowed if weighted average price of Oklahoma oil exceeds $30/bbl. and the weighted average wellhead price of Oklahoma natural gas exceeds $5.00/MCF on an annual calendar year basis.