HLS 14RS-1471 ENGROSSED
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are additions.
Regular Session, 2014
HOUSE BILL NO. 713
BY REPRESENTATIVE GREENE
TAX/SEVERANCE TAX: Provides that severance taxes do not have to be paid during the
period of a suspension or exemption from severance tax under certain circumstances
AN ACT1
To amend and reenact R.S. 47:633(9)(d)(v) and to enact R.S. 633(7)(c)(iii)(cc), relative to2
severance tax; to provide with respect to the payment of severance tax by certain3
well operators; to provide for certain requirements; to provide for applicability; to4
provide for an effective date; and to provide for related matters.5
Be it enacted by the Legislature of Louisiana:6
Section 1. R.S. 47:633(9)(d)(v) is hereby amended and reenacted and R.S.7
633(7)(c)(iii)(cc) is hereby enacted to read as follows: 8
ยง633. Rates of tax9
* * *10
(7) 11
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(c)13
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(iii)15
* * *16
(cc) Severance tax shall not be required to be paid from the date production17
begins from horizontal wells if the well operator files, prior to first production, a18
preliminary application for well status determination along with a directional survey19
demonstrating that the well meets the requirements of a horizontal well with the20 HLS 14RS-1471 ENGROSSED
HB NO. 713
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are additions.
Louisiana Department of Natural Resources, office of conservation, and the office1
of conservation certifies that the well meets the horizontal well requirements.2
Additionally, within two hundred seventy days of first production, the well operator3
shall complete and file an amended application for well status determination with the4
office of conservation which shall include the date the well commenced production5
and the detailed itemized well cost statement in order for severance tax obligations6
to be suspended from the date production begins from qualified horizontal wells.7
Well operators shall continue to file severance tax returns with the corresponding8
lease detail reports for these wells during the severance tax suspension period. When9
filing the lease detail reports, the operator shall insert the well serial code in place10
of the lease code. If production from the well is attributable to a state lease, the11
operator shall be required to pay royalty to the state throughout the severance tax12
suspension period. Failure to file an amended application for well status13
determination with the office of conservation within two hundred seventy days of14
first production shall not affect the qualified well's suspension status provided that15
the amended application is received within twenty-four months or until payout of the16
well is achieved, whichever comes first.17
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(9)19
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(d)21
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(v) Production of natural gas, gas condensate, and oil from any well drilled23
to a true vertical depth of more than fifteen thousand feet, where production24
commences after July 31, 1994, shall be exempt from severance tax, from the date25
production begins, for twenty-four months or until payout of the well cost, whichever26
comes first. Severance tax shall not be required to be paid from the date production27
begins from deep wells if the well operator files, prior to first production, a28
preliminary application for well status determination, along with a directional survey29 HLS 14RS-1471 ENGROSSED
HB NO. 713
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
demonstrating that the well meets the requirements of a deep well with the Louisiana1
Department of Natural Resources, office of conservation, and the office of2
conservation certifies that the well meets the deep well requirements. Additionally,3
within two hundred seventy days of first production, the well operator shall complete4
and file an amended application for well status determination with the office of5
conservation which shall include the date the well commenced production and the6
detailed itemized well cost statement in order for severance tax obligations to be7
suspended from the date production begins from qualified deep wells. Well8
operators shall continue to file severance tax returns with the corresponding lease9
detail reports for these wells during the severance tax suspension period. When10
filing the lease detail reports, the operator shall insert the well serial code in place11
of the lease code. If production from the well is attributable to a state lease, the12
operator shall be required to pay royalty to the state throughout the severance tax13
suspension period. Failure to file an amended application for well status14
determination with the office of conservation within two hundred seventy days of15
first production shall not affect the qualified well's suspension status provided that16
the amended application is received within twenty-four months or until payout of the17
well is achieved, whichever comes first.18
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Section 2. This Act shall become effective January 1, 2015, and shall be applicable20
to any claim of refund filed with a return due on or after January 1, 2015.21
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Greene HB No. 713
Abstract: Provides that severance taxes from horizontal wells or deep wells do not have to
be paid during the suspension period if the well operator files, prior to first
production, a preliminary application for well status determination along with a
directional survey demonstrating that the well meets the requirements of a horizontal
well or deep well with the office of conservation. HLS 14RS-1471 ENGROSSED
HB NO. 713
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are additions.
Present law provides for the levy of a tax for natural resources severed from the soil or water
predicated on the quantity of the value of the products or resources severed. The rate of the
tax varies based on the natural resource.
Present law provides for a suspension on the collection of severance taxes for 24 months or
until payout of the well cost is achieved, whichever comes first, on any horizontally drilled
well or any horizontally drilled well recompletion well from which production commences
after July 1, 1994. Payout of the well cost shall be the cost of completing the well to
commencement of productions determined by the Dept. of Natural Resources (DNR).
Present law provides for a suspension on the collection of severance taxes for 24 months or
until payout of the well, which ever comes first, for production of natural gas, gas
condensate, and oil from any well drilled to a true vertical depth of more than 15,000 feet,
where production commences after July 31, 1994.
Proposed law retains present law but specifies that the severance tax shall not be required
to be paid from horizontal wells or deep wells from the date production begins if the well
operator files, prior to first production, a preliminary application for well status
determination along with a directional survey demonstrating that the well meets the
requirements of a horizontal well or deep well with the office of conservation. Further
requires the office of conservation to certify that the well meets the horizontal well or deep
well requirements.
Proposed law additionally requires, within 270 days of first production, the well operator to
complete and file an amended application for well status determination with the office of
conservation which shall include the date the well commenced production and the detailed
itemized well cost statement in order for severance tax obligations to be suspended from the
date production begins from qualified horizontal wells or deep wells. Failure to file an
amended application for well status determination within 270 days of first production shall
not affect the qualified well's suspension status provided that the amended application is
received within 24 months or until payout of the well is achieved, whichever comes first.
Proposed law requires well operators to continue to file severance tax returns with the
corresponding lease detail reports for these wells during the severance tax suspension period
and to continue to pay royalty to the state throughout the severance tax suspension period
if production from the well is attributable to a state lease.
Effective Jan. 1, 2015, and shall be applicable to any claim of refund filed with a return due
on or after Jan. 1, 2015.
(Amends R.S. 47:633(9)(d)(v); Adds R.S. 633(7)(c)(iii)(cc))
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Ways and Means to the
original bill.
1. Changed the requirement that in order for a horizontal well or deep well operator
to be suspended from the payment of severance taxes from a requirement that the
well operator hold a certificate of good standing issued by the Dept. of Revenue
and DNR to a requirement that the well operator file, prior to first production, a
preliminary application for well status determination along with a directional
survey demonstrating that the well meets the requirements of a horizontal well
or deep well with the office of conservation. Further requires the office of
conservation to certify that the well meets the horizontal well or deep well
requirements. HLS 14RS-1471 ENGROSSED
HB NO. 713
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
2. Added requirements relative to the completion and filing of amended
applications for well status determinations including the date the well
commenced production and the detailed itemized well cost statement in order for
severance tax obligations to be suspended from the date production begins from
qualified wells.
3. Added provisions relative to the failure of an operator to file an amended
application for well status determination within 270 days of first production.
4. Added requirement that well operators continue to file severance tax returns with
lease detail reports during the severance tax suspension period and to continue
to pay royalty to the state throughout the severance tax suspension period if
production from the well is attributable to a state lease.
5. Changed the effective date from upon signature of governor to Jan. 1, 2015, and
adds applicability to any claim of refund filed with a return due on or after Jan.
1, 2015.