Texas House Bill HB3865

Texas 2019 - 86th Regular

Caption

Relating to calculation of daily production for purposes of the oil and gas production tax credits for low-producing wells and leases.

Impact

If passed, HB3865 will directly affect the tax benefits available to operators of low-producing gas wells, ensuring that smaller producers have a clearer path to accessing tax credits. This could potentially stimulate activity in the oil and gas sector by providing financial relief to smaller operations that may struggle under existing tax burdens. The bill is structured to maintain compliance with reporting requirements to the Texas Commission and the comptroller's office, ensuring that state tax laws are adhered to while facilitating the specific needs of low-producing operators.

Summary

House Bill 3865 aims to amend certain provisions of the Texas Tax Code regarding the calculation of daily production for purposes of oil and gas production tax credits specifically for low-producing wells and leases. The bill proposes changes to how daily production is determined, particularly refining the definition of a 'qualifying low-producing well' to focus on gas wells that produce no more than 90 thousand cubic feet (mcf) per day over a designated three-month period. This amendment seeks to improve the accuracy and reliability of production reporting, which is vital for small producers aiming to qualify for tax credits.

Contention

While the bill may generate support among small gas operators who stand to benefit from enhanced tax credit eligibility, there could be contentious arguments from larger oil and gas companies who might perceive it as preferential treatment. The balance between adequately supporting smaller producers without creating disparities in the treatment of larger firms could be a point of debate. Opponents may also raise concerns regarding the broader implications of modifying existing tax code requirements, questioning whether such changes might lead to a loss in state revenue or create loopholes that could be exploited.