Tax Exemption for Qualifying Low Producing Gas Wells
The Texas Legislature has provided a natural gas severance tax exemption for low producing gas wells. The exemption took effect Sept. 1, 2005.
To qualify for tax exemption, production on an eligible gas well as reported to the Texas Railroad Commission during the prior three months cannot exceed 90 Mcf per day. The amount of exemption is based upon the Comptroller-certified average gas price for that report month. The average gas price is based upon daily index prices for the three months immediately prior to the report month.
Qualifying wells
Taxpayers can file form AP-217 (PDF, 74k) for any gas wells that meet the production requirements given above. The production per day will be determined by using the monthly well production report filed with the Texas Railroad Commission. The exemption does not apply to casinghead gas or condensate.
Price Conditions
Gas from qualified wells becomes eligible for different levels of exemption from natural gas severance tax based upon the Comptroller-certified average price for the reporting month.
| Average Taxable Gas Price | Exemption |
|---|---|
| More Than $3.50 | No Exemption |
| Over $3 to $3.50 | 25 Percent Credit |
| Over $2.50 to $3 | 50 Percent Credit |
| $2.50 or Less | 100 Percent Credit |
The Comptroller-certified average price of gas to be used in these calculations will be posted in the Texas Register and on this Web site. When the average price falls within one of the categories listed above, gas will be allowed the corresponding level of exemption for that reporting month.
Low Producing Well Exemption
2012
| Report Period | Price of Gas | Eligibility |
|---|---|---|
| December 2012 | $2.71/Mcf | Eligible for 50 Percent Credit |
| November 2012 | $2.47/Mcf | Eligible for 100 Percent Credit |
| October 2012 | $2.33/Mcf | Eligible for 100 Percent Credit |
| September 2012 | $2.23/Mcf | Eligible for 100 Percent Credit |
| August 2012 | $2.14/Mcf | Eligible for 100 Percent Credit |
| July 2012 | $1.89/Mcf | Eligible for 100 Percent Credit |
| June 2012 | $1.84/Mcf | Eligible for 100 Percent Credit |
| May 2012 | $1.86/Mcf | Eligible for 100 Percent Credit |
| April 2012 | $2.05/Mcf | Eligible for 100 Percent Credit |
| March 2012 | $2.32/Mcf | Eligible for 100 Percent Credit |
| February 2012 | $2.60/Mcf | Eligible for 50 Percent Credit |
| January 2012 | $2.85/Mcf | Eligible for 50 Percent Credit |
2011
| Report Period | Price of Gas | Eligibility |
|---|---|---|
| December 2011 | $2.93/Mcf | Eligible for 50 Percent Credit |
| November 2011 | $2.97/Mcf | Eligible for 50 Percent Credit |
| October 2011 | $3.08/Mcf | Eligible for 25 Percent Credit |
| September 2011 | $3.26/Mcf | Eligible for 25 Percent Credit |
| August 2011 | $3.35/Mcf | Eligible for 25 Percent Credit |
| July 2011 | $3.34/Mcf | Eligible for 25 Percent Credit |
| June 2011 | $3.23/Mcf | Eligible for 25 Percent Credit |
| May 2011 | $3.18/Mcf | Eligible for 25 Percent Credit |
| April 2011 | $3.26/Mcf | Eligible for 25 Percent Credit |
| March 2011 | $3.34/Mcf | Eligible for 25 Percent Credit |
| February 2011 | $3.35/Mcf | Eligible for 25 Percent Credit |
| January 2011 | $3.12/Mcf | Eligible for 25 Percent Credit |
2010
| Report Period | Price of Gas | Eligibility |
|---|---|---|
| December 2010 | $3.02/Mcf | Eligible for 25 Percent Credit |
| November 2010 | $3.07/Mcf | Eligible for 25 Percent Credit |
| October 2010 | $3.34/Mcf | Eligible for 25 Percent Credit |
| September 2010 | $3.57/Mcf | Not Eligible for Exemption |
| August 2010 | $3.55/Mcf | Not Eligible for Exemption |
| July 2010 | $3.42/Mcf | Eligible for 25 Percent Credit |
| June 2010 | $3.29/Mcf | Eligible for 25 Percent Credit |
| May 2010 | $3.58/Mcf | Not Eligible for Exemption |
| April 2010 | $3.99/Mcf | Not Eligible for Exemption |
| March 2010 | $4.27/Mcf | Not Eligible for Exemption |
| February 2010 | $4.12/Mcf | Not Eligible for Exemption |
| January 2010 | $3.90/Mcf | Not Eligible for Exemption |
2009
| Report Period | Price of Gas | Eligibility |
|---|---|---|
| December 2009 | $3.41/Mcf | Eligible for 25 Percent Credit |
| November 2009 | $3.06/Mcf | Eligible for 25 Percent Credit |
| October 2009 | $2.74/Mcf | Eligible for 50 Percent Credit |
| September 2009 | $2.87/Mcf | Eligible for 50 Percent Credit |
| August 2009 | $3.04/Mcf | Eligible for 25 Percent Credit |
| July 2009 | $3.06/Mcf | Eligible for 25 Percent Credit |
| June 2009 | $3.09/Mcf | Eligible for 25 Percent Credit |
| May 2009 | $3.22/Mcf | Eligible for 25 Percent Credit |
| April 2009 | $3.64/Mcf | Not Eligible for Exemption |
| March 2009 | $4.14/Mcf | Not Eligible for Exemption |
| February 2009 | $4.76/Mcf | Not Eligible for Exemption |
| January 2009 | $5.16/Mcf | Not Eligible for Exemption |
2008
| Report Period | Price of Gas | Eligibility |
|---|---|---|
| December 2008 | $5.55/Mcf | Not Eligible for Exemption |
| November 2008 | $5.91/Mcf | Not Eligible for Exemption |
| October 2008 | $7.01/Mcf | Not Eligible for Exemption |
| September 2008 | $8.24/Mcf | Not Eligible for Exemption |
| August 2008 | $9.13/Mcf | Not Eligible for Exemption |
| July 2008 | $8.95/Mcf | Not Eligible for Exemption |
| June 2008 | $8.22/Mcf | Not Eligible for Exemption |
| May 2008 | $7.41/Mcf | Not Eligible for Exemption |
| April 2008 | $6.90/Mcf | Not Eligible for Exemption |
| March 2008 | $6.61/Mcf | Not Eligible for Exemption |
| February 2008 | $6.44/Mcf | Not Eligible for Exemption |
| January 2008 | $6.25/Mcf | Not Eligible for Exemption |
2007
| Report Period | Price of Gas | Eligibility |
|---|---|---|
| December 2007 | $5.87/Mcf | Not Eligible for Exemption |
| November 2007 | $5.49/Mcf | Not Eligible for Exemption |
| October 2007 | $5.37/Mcf | Not Eligible for Exemption |
| September 2007 | $5.65/Mcf | Not Eligible for Exemption |
| August 2007 | $5.39/Mcf | Not Eligible for Exemption |
| July 2007 | $5.82/Mcf | Not Eligible for Exemption |
| June 2007 | $6.16/Mcf | Not Eligible for Exemption |
| May 2007 | $6.50/Mcf | Not Eligible for Exemption |
| April 2007 | $6.42/Mcf | Not Eligible for Exemption |
| March 2007 | $6.18/Mcf | Not Eligible for Exemption |
| February 2007 | $6.17/Mcf | Not Eligible for Exemption |
| January 2007 | $6.29/Mcf | Not Eligible for Exemption |
2006
| Report Period | Price of Gas | Eligibility |
|---|---|---|
| December 2006 | $6.25/Mcf | Not Eligible for Exemption |
| November 2006 | $5.69/Mcf | Not Eligible for Exemption |
| October 2006 | $5.40/Mcf | Not Eligible for Exemption |
| September 2006 | $5.63/Mcf | Not Eligible for Exemption |
| August 2006 | $5.46/Mcf | Not Eligible for Exemption |
| July 2006 | $5.75/Mcf | Not Eligible for Exemption |
| June 2006 | $5.91/Mcf | Not Eligible for Exemption |
| May 2006 | $6.24/Mcf | Not Eligible for Exemption |
| April 2006 | $6.78/Mcf | Not Eligible for Exemption |
| March 2006 | $8.62/Mcf | Not Eligible for Exemption |
| February 2006 | $9.82/Mcf | Not Eligible for Exemption |
| January 2006 | $11.061/Mcf | Not Eligible for Exemption |
2005
| Report Period | Price of Gas | Eligibility |
|---|---|---|
| December 2005 | $10.68/Mcf | Not Eligible for Exemption |
| November 2005 | $10.03/Mcf | Not Eligible for Exemption |
| October 2005 | $8.35/Mcf | Not Eligible for Exemption |
| September 2005 | $6.95/Mcf | Not Eligible for Exemption |
View HB 2161
Also view Crude Oil Low Producing Well Exemptions