Administrative Rules of Montana › Department 42 - REVENUE › Chapter 42.25 - NATURAL RESOURCES TAXES › Subchapter 42.25.18 - Oil and Gas › Rule 42.25.1808 - DUALLY QUALIFIED STRIPPER WELLS AND ENHANCED RECOVERY PROJECTS

Current through Register Vol. 13, July 5, 2024
(1) For the purpose of this rule a lease or
				unit will be considered to be dually qualified if the lease or unit qualifies
				as an oil stripper and the wells are within an approved enhanced recovery
				project. If the wells are dually qualified, the tax rates for stripper,
				incremental and non-incremental may all apply.
(a) If the production for a quarter from a
				dually qualified lease or unit is less than 270 barrels (three barrels/day
				times 90 days in a calendar quarter) for each producing well in the lease or
				unit the tax rates in ARM
				42.25.1809(1) (b) (ii) (C) or (1) (b) (ii) (D)
				 apply.
(b) If the production for a quarter from a
				dually qualified lease or unit is less than 900 barrels (10 barrels/day times
				90 days in a calendar quarter) for each producing well in the lease or unit the
				tax rates in ARM
				42.25.1809(1) (b) (ii) (A)
				 apply.
(c) If the production from each well in a
				dually qualified lease or unit is greater than 900 barrels for each producing
				well in the lease or unit the tax rates in ARM
				42.25.1809(1) (b) (ii) (A)
				 apply to the first 10 barrels, and if:
(i) The total production for the quarter from
				the dually qualified lease or unit is less than the "production decline rate"
				for the calendar quarter any production in excess of 900 barrels times the
				number of producing wells in the dually qualified lease or unit will be taxed
				at the rates in ARM
				42.25.1809(1) (b) (ii)
				(B). None of the production would be taxed at
				the incremental tax rates. Example: A dually qualified lease or unit has 3
				producing wells in it and the "production decline rate" for the quarter is 5700
				barrels. The actual production for the quarter is 5000 barrels. Therefore, 2700
				barrels (3 wells times 900 barrels per well) would be taxed at the rates in ARM
				42.25.1809(1) (b) (ii)
				(A), and 2300 barrels (5000 barrels minus
				2700 barrels) would be taxed at the rates in ARM
				42.25.1809(1) (b) (ii)
				(B).
(ii) The total production for the calendar
				quarter from the dually qualified lease or unit that is in excess of the
				"production decline rate" will be taxed as incremental. The tax rates in ARM
				42.25.1809(1) (b) (iv) (A)
				 will apply for secondary production, or the
				tax rates in ARM
				42.25.1809(1) (b) (iv) (B)
				 for tertiary production will apply.
Example:
A dually qualified lease or
				  unit has 5 producing wells in it and the "production decline rate" for the
				  quarter is 5700 barrels. The actual production for the quarter is 6000 barrels.
				  Therefore, 4500 barrels (5 wells times 900 barrels per well) would be taxed at
				  the rates in ARM
				  42.25.1809(1) (b) (ii)
				  (A), and 1200 barrels (1200 barrels plus 4500
				  barrels = 5700) would be taxed at the rates in ARM
				  42.25.1809(1) (b) (ii)
				  (B), and 300 (6000-5700) barrels would be
				  taxed at the appropriate incremental tax rates in ARM
				  42.25.1809(1) (b)
				  (iv).