Gas

Oil and gas severance tax returns must be filed electronically using the Louisiana Department of Revenue Severance Application. Once you have obtained your 10-digit revenue account number, go to Severance Notice and follow the prompts to register for the Oil and Gas Severance Application. Here you will create a user-id and password that will enable you to file the monthly returns that are required by all producers, purchasers, and other persons dealing in oil or gas severed from the soil or water in Louisiana.

To register for a severance tax account, go to LDR’s website at Business Registration, and click on the appropriate registration link to either register a new business or add a revenue account. Please note: If you are a purchaser withholding tax from the sever you must obtain a severance tax account to report and remit the withheld tax.

Prior to severing or removing natural resources from their natural state, oil and gas severers must first obtain a permit from the Department of Natural Resources (DNR), Office of Conservation. Their office can be contacted at (225) 342-5540 or you can visit their website at http://www.dnr.louisiana.gov/ for additional information. After the Office of Conservation has assigned a producer code, you must then register with the Louisiana Department of Revenue (LDR) and obtain a 10-digit account number.

The severance oil and condensate tax rates are as follows:

• • Full Rate (Wells completed after July 1, 2025) : 6.5 percent of value

    Full Rate (Wells completed before July 1, 2025) : 12.5 percent of value

    :

    Incapable Rate : 6.25 percent of value

    Stripper Rate : 3.125 percent of value

    :

    Inactive Reduced Oil Rate (taxable periods after October 2024) : 3.125 percent of value

    Inactive Reduced Oil Rate (taxable periods prior to October 2024) : 6.25 percent of value

    :

    Orphan Reduced Oil Rate (taxable periods after October 2024) : 1.5625 percent of value

    Orphan Reduced Oil Rate (taxable periods prior to October 2024) : 3.125 percent of value

    :

    Reclaimed Oil : 3.125 percent of value

    :

    Orphan Well Rework Program: 100 percent exempt for initial 3 months of production

    1.5625 percent of value

    :

    Horizontal Rate (Wells completed after July 1, 2025) :

    7/25 through 6/26 : 1.3 percent of value

    :

    Horizontal Rate (Wells completed before July 1, 2025) :

    7/22 through 6/23 : 5.0 percent of value

    7/23 through 6/24 : 5.0 percent of value

    7/24 through 6/25 : 2.5 percent of value

    7/25 through 6/26 : 2.5 percent of value

    :

    Produced Water – Full Rate (Wells completed after July 1, 2025) : 5.2 percent of value

    Produced Water – Full Rate (Wells completed before July 1, 2025) : 10 percent of value

    Produced Water – Incapable Rate : 5.0 percent of value

    Produced Water – Stripper Rate : 2.5 percent of value

    Tertiary – Full Rate (Wells completed after July 1, 2025) : 3.25 percent of value

    Tertiary – Full Rate (Wells completed before July 1, 2025) : 6.25 percent of value

    Tertiary – Incapable Rate : 3.125 percent of value

    Tertiary – Stripper Rate : 1.5625 percent of value

Stripper oil is exempt for any taxable period during which the average taxable value is less than $20 per barrel per LA R.S. 47:633(7)(c)(i)(bb).

LA R.S. 47:633(7)(d)(i) provides that the Secretary shall determine the oil price upon which the exemption for a horizontal well that produces oil be based on July First of each year for the ensuing twelve months based upon the average New York Mercantile Exchange Price per barrel of crude oil per month on the close of business June Thirtieth for the prior twelve months. The amount of the exemption for a horizontal well that produces oil shall be as follows:

• The exemption shall be 100% if the price of oil is at or below $70 per barrel.

• The exemption shall be 80% if the price of oil is above $70 and at or below $80 per barrel.

• The exemption shall be 60% if the price of oil is above $80 and at or below $90 per barrel.

• The exemption shall be 40% if the price of oil is above $90 and at or below $100 per barrel.

• The exemption shall be 20% if the price of oil is above $100 and at or below $110 per barrel.

• There shall be no exemption in effect if the price of oil exceeds $110 per barrel.

LA R.S. 47:633(7)(a) provides that the taxable value of oil shall be the higher of (1) the gross receipts received from the first purchaser, less charges for trucking, barging and pipeline fees, or (2) the posted field price. In the absence of an arms-length transaction or posted field price, the value shall be the severer’s gross income from the property as determined by LA R.S. 47:158(C).

LA R.S. 47:633(8) provides that the tax rate for distillate, condensate, or similar natural resources severed from the soil or water either with oil or gas is 12.5 percent of its gross value at the time and place of severance.

The taxpayer should log into the Severance Application and select the taxable period that needs to be amended. You must file an amendment reversing the line item(s), As Reported, and showing another line item, As Should be Reported.

LA R.S. 30:87 imposes the oilfield site restoration fee on each barrel of oil and condensate produced from producing wells in this state. The fee must be paid by the operator of record. Louisiana Administrative Code 61:I.5301.E.3 provides that “Every operator of record of producing oil and/or gas wells must submit a return and make payments of the fees imposed by LA R.S. 30:87. Purchasers of oil and/or gas may make payment on behalf of the operator of record and their respective working-interest owners." Purchasers who pay the fee on behalf of working-interest owners, should provide them with notice of the date and amount of payment.