Certification Process Oil

Who Must File

The application form is to be completed in its entirety by the producer/operator of record.

Reduced Oil Severance Tax Rates

• Stripper well rate – well that is incapable of producing an average of more than 10 barrels of oil per producing day at 3.125 percent of value.
• Incapable oil well rate – well which is incapable of producing an average of more than 25 barrels of oil per producing day and produces 50 percent or more salt water(salt water production must be equal to or greater than oil production). All wells on the lease or property must be incapable or stripper at 6.25 percent of value.

Date Application Due

The original application should be submitted on or before the 25th day of the second month following the production month in which the reduced tax rate(s) is applicable.  The application must be filed through LaTAP.

Reporting

• The approved O2 certification allows the severance tax to be paid at the reduced rate for the first month of the certification.
• Wells that have been certified as stripper wells and incapable wells must be reported each month on the O3 form.
• Wells cannot be certified as both a stripper and an incapable oil well.
• Recertification is required whenever the well operator changes.

All wells are subject to redetermination of their reduced rate status based on reports filed with the Department and the Office of Conservation. When a well no longer meets the qualifications for the reduced tax rate for which it was certified, the full tax rate becomes due.

Who Must File

The application form is to be completed in its entirety by the producer/operator of record.

Reduced Oil Severance Tax Rates

• Stripper well rate – well that is incapable of producing an average of more than 10 barrels of oil per producing day at 3.125 percent of value.
• Incapable oil well rate – well which is incapable of producing an average of more than 25 barrels of oil per producing day and produces 50 percent or more salt water(salt water production must be equal to or greater than oil production). All wells on the lease or property must be incapable or stripper at 6.25 percent of value.

Date Application Due

The original application should be submitted on or before the 25th day of the second month following the production month in which the reduced tax rate(s) is applicable.  The application must be filed through LaTAP.

Reporting

• The approved O2 certification allows the severance tax to be paid at the reduced rate for the first month of the certification.
• Wells that have been certified as stripper wells and incapable wells must be reported each month on the O3 form.
• Wells cannot be certified as both a stripper and an incapable oil well.
• Recertification is required whenever the well operator changes.

All wells are subject to redetermination of their reduced rate status based on reports filed with the Department and the Office of Conservation. When a well no longer meets the qualifications for the reduced tax rate for which it was certified, the full tax rate becomes due.