Administrative Rules of Montana › Department 42 - REVENUE › Chapter 42.25 - NATURAL RESOURCES TAXES › Subchapter 42.25.18 - Oil and Gas › Rule 42.25.1804 - HORIZONTALLY COMPLETED OR RECOMPLETED WELLS

Current through Register Vol. 13, July 5, 2024
(1) For horizontally completed or
				horizontally recompleted wells the operator must provide to the department of
				revenue a copy of the horizontal certification from the board of oil and gas
				conservation. If the operator does not provide the certification, or the well
				is not certified by the board as horizontally completed, production from the
				well will be subject to the tax rates in ARM
				42.25.1809(1) (b) (i)
				 for oil wells, and
				42.25.1809(1) (a) (i)
				 for gas wells until such time as operator
				provides the certification to the department. If a certification is received by
				the department after the month in which production for sale first occurs, and
				the taxpayer has filed and paid taxes on production which is greater than would
				otherwise be due, a refund or credit will be granted to the taxpayer.
(2) Production from pre-1999 and post-1999
				wells certified by the board to be horizontally completed will be subject to
				the tax rates in ARM
				42.25.1809(1) (b) (iii) (A)
				 for oil wells, and
				42.25.1809(1) (a) (iii) (A)
				 for post-1999 gas wells for the first 18
				months following the last day of the calendar month immediately preceding the
				month in which production for sale from a crude oil or natural gas well is
				pumped or flows. Production from pre-1999 certified horizontal wells will be
				subject to the tax rates under ARM
				42.25.1809(1) (b) (iii) (B)
				 after the first 18 months of production
				unless it is a stripper producer or has incremental production. Production from
				post-1999 certified horizontal oil wells will be subject to the tax rates under
				ARM 42.25.1809(1) (b) (iii) (C)
				 after the first 18 months of production
				unless it is a stripper producer or has incremental production. Production from
				post-1999 certified horizontal gas wells will be subject to the tax rates under
				ARM 42.25.1809(1) (a) (iii) (B)
				 after the first 18 months of production.
Example
: The first production for
				  sale from a horizontally drilled oil well is February 18, 1998. February 1998
				  is considered the first month of production subject to the tax rates in ARM
				  42.25.1809(1) (b) (iii)
				  (A), and the last month of the exemption will
				  be July 1999. The first month of production subject to the tax rates in ARM
				  42.25.1809(1) (b) (iii) (B)
				   in this example is August 1999. The tax
				  rates in ARM
				  42.25.1809(1) (b) (iii) (A)
				   will apply to the month in which production
				  for sale first occurs regardless of when the operator provides a copy of the
				  certification notice to the department.
(3) All production from wells certified by
				the board to be horizontally recompleted which have produced oil during the
				five years immediately preceding the month the well was horizontally
				recompleted will be classified as incremental and the tax rates in ARM
				42.25.1809(1) (b) (v)
				 apply.
(4) This section applies to a well reported
				as a pre-1999 oil well prior to recompletion as a horizontal well. For oil
				wells certified by the board to be horizontally recompleted, the tax rates in
				ARM 42.25.1809(1) (b) (v) (A) and (B)
				 apply to the incremental production. The
				operator must provide a production decline rate approved by the board. If a
				well is in primary recovery after the first 18 months of production the well
				will be classified as a pre-1999 well, and the tax rates in ARM
				42.25.1809(1) (b) (i) (B)
				 will apply, or if qualified as a stripper
				well the rates in ARM
				42.25.1809(1) (b) (ii) (A) and
				(B), or
				42.25.1809(1) (b) (ii) (C)
				 apply.
(5) This section applies to a well reported
				as a post-1999 oil well prior to recompletion as a horizontal well. For oil
				wells certified by the board to be horizontally recompleted, the tax rates in
				ARM 42.25.1809(1) (b) (v) (A) and (C)
				 apply to the incremental production. The
				operator must provide a production decline rate approved by the board. If a
				well is in primary recovery after the first 18 months of production the well
				will be classified as a post-1999 well, and the tax rates in ARM
				42.25.1809(1) (b) (i) (C)
				 will apply, or if qualified as a stripper
				well the rates in ARM
				42.25.1809(1) (b) (ii) (A) and (B)
				 or
				42.25.1809(1) (b) (ii) (C)
				 apply.
15-36-322, MCA; IMP,
					 15-36-304,
					 MCA;