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)]
HB 256 Reengrossed 2019 Regular Session Jim Morris
Abstract: Establishes a severance tax exemption, effective Jan. 1, 2020, through Dec. 31, 2029, for
oil produced from incapable wells when the average price of oil is less than $75 per barrel.
Present law imposes a tax on natural resources severed from the soil or water based upon quantity
or value of the products or resources severed.
Present law establishes a severance tax on oil at a rate of 12.5% of its value at the time and place of
severance. The value is determined to by the higher of: (1) gross receipts received from the first
purchaser, less charges for trucking, barging and pipeline fees, or (2) the posted field price.
Present law defines an incapable well as an oil well that is incapable of producing an average of
more than 25 barrels of oil per day and that produces at least 50% salt water per day.
Present law establishes a severance tax rate on oil produced from incapable wells at 6.25%.
Proposed law retains present law but, beginning Jan. 1, 2020, through Dec. 31, 2029, establishes
an exemption from severance taxes for oil produced from incapable wells when the average value
of oil is less than $75 per barrel. Further requires all reports to be timely submitted in order to
qualify for the exemption in proposed law.
Present law requires the secretary to determine the value of oil for purposes of qualifying for certain
severance tax exemptions based on the New York Mercantile Exchange Price (NYMEX) per barrel
for the prior 12 months, July through June.
Proposed law retains present law but requires that the secretary determine on a quarterly basis, the
value of oil produced from incapable wells based on the average NYMEX for the prior three months
for purposes of qualifying for the severance tax exemption on oil produced from incapable wells as
established in proposed law.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 47:633(7)(b))
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Ways and Means to the original bill:
1. Require the secretary of the Dept. of Revenue to determine, on a quarterly basis, the oil
value for purposes of qualifying for the exemption in proposed law.
2. Require the secretary's oil value determination to be based on the average NYMEX price
per barrel of crude oil per month for the prior three months.
The House Floor Amendments to the engrossed bill:
1. Add requirement that taxpayers file all required reports timely in order to qualify for the
exemption in proposed law for oil produced from incapable wells.