Gross Production Tax Exemption for Deep Wells in Oklahoma

1995 Senate Bill 495 and 1994 Senate Bill 841 provide for a gross production tax exemption for deep wells drilled in Oklahoma.  The bills provide for a refund of 6% out of the total 7% gross production tax for production from wells deeper than 15,000 feet if spudded between July 1,1994 and June 30, 1997, wells deeper than 12,500 feet if drilled between July 1, 1997 and June 30, 2002.  If the well is spudded between July 1, 2002 and June 30, 2015, and is deeper than 12,500 feet, then the well is exempt for 28 to 60 months depending on the well’s depth.  The effective date of this bill is July 1, 1994 and is currently set to expire on June 30, 2015.

Price Caps

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.

Gross Production Tax Refund Filing Deadline

Gross production tax refund claims for deep wells must be filed within 18 months of the date in which they are eligible to be claimed.

Deep Well Refund Limit

For the fiscal years ending June 30, 2009 through June 30, 2012 the total amount to be refunded will be limited to $25,000,000 per year.  Recently companies have been receiving around 50 cents on the dollar for their deep well refund claims.

Oklahoma Deep Well Gross Production Tax Exemption Seminar

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"We engaged Petroleum Accounting Consultants, PLLC to review the wells we operate for gross production tax refunds. Petroleum Accounting Consultants, PLLC performed all the work necessary to determine eligibility. All we had to do was sign the forms submitted to the Corporation Commission and Tax Commission. As a result of Petroleum Accounting Consultants, PLLC's work we received substantial refunds of gross production taxes. Petroleum Accounting Consultants, PLLC is continuing to review our workovers and file refund claims for us. We are extremely pleased with their work and professional attitude."

- Phoenix Oil & Gas, Inc. - Jack Nogalski

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Our consultants can complete your severance tax returns and save you money on salary expense and payroll tax expense. More importantly our consultants are familiar with the various severance tax incentives offered by oil and gas producing states and can take advantage of them, which will save you money on your severance taxes.

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